Renting Vs Buying Calculator Australia [Which is better for me?] 🤔

There’s more to it than you think

Compare your current rent with your mortgage payment

Today we  answer the question—renting vs buying, which is better for you?

Table of Contents

Renting—Pros and Cons

Renting isn’t just an option for those who cannot afford a deposit on a home. Deciding to rent or buy is a decision dependent on the circumstances you’re currently in.

Pros of renting

  • You have flexibility – if you want to move to a new city, or even just a new suburb, you can just find a new rental when your current lease expires.

  • Any maintenance issues are the responsibility of the property owner.

  • Moving is a relatively straightforward process. You don’t have to wait for your house to sell before you can take a job offer in a new city or move to a different neighbourhood.

Cons of renting

  • It’s always possible that a property owner will decide that they no longer want to rent to a particular tenant. Knowing that your ability to stay comfortable in the place you call home is up to someone else can be nerve-wracking.


  • Competition in the real estate market has made renting more common, and this competition
    means that rent prices continue to increase.


  • Renting doesn’t allow you to own an asset.


  • You can’t make alterations to the property as you see fit.

Read More: Rentvesting, the pros and cons of it all.

Buying—Pros and Cons

Just like renting, there are some pros and cons associated with buying a property.

Pros of buying a property

  • Mortgage payments associated with a fixed interest rate are set, so you’ll be able to budget your housing repayments without worrying about an increase in the overall amount owed.

  • You retain the right to make modifications to your home without having to ask permission from a landlord. You can paint your walls lime green if you want without dealing with property managers.

  • Buying gives you stability in that the landlord is not going to suddenly decide to kick you out because they now want to live on or sell their property.

  • If you have trouble saving money, paying off a mortgage acts as a forced savings plan. You’re buying an asset that can be sold in the future.

  • If you buy a house in the right location, it will appreciate in value. So a house is an asset that is (hopefully) constantly increasing in value.

  • Your monthly payments are going towards paying down your debt and building equity, so after some time, you will own a debt-free property that has actually increased in value, and this may give you financial peace of mind for retirement.

Cons of buying a property

  • The price of buying a home may make it impossible for you to live in your desired location.

  • Buying a home can be restrictive if you decide to move.

  • Anything that goes wrong on your property is your responsibility. You’ll have to cover the costs when maintenance issues crop up.

Read More: How to Buy a House in Australia

Things to consider when deciding to rent or buy

Which one is right for you? There is no right or wrong answer when it comes to deciding. It really depends on your individual situation, but you can consider the following things:

Deciding to rent or buy
  • How long are you going to live in that house? If you are thinking of travelling in the next six months, buying might not be a great idea. You might want to keep that money and spend it on a trip to France to see the Eiffel Tower.


  • The cost of housing in your area. So again, if you want to live in Mossman, Sydney, or Paddington in Brisbane, but you don’t have a deposit for a million-dollar property, it’s going to be pretty tough to buy a house. But you will most likely be able to afford to rent in those places while investing in a place you can afford to buy.


  • The opportunity cost of buying a house. Opportunity cost is the loss of other alternatives when one choice is made. So you need to think of whether or not you can make more money investing in a house or investing in other things. You have got to do the numbers yourself and see what makes sense.

What do the numbers say?

Let’s look at sunk costs. A sunk cost is a cost that has already been incurred and cannot be recovered in the future. In other words, it is when you have already spent your money on something, and there is no way of getting it back in the future.

sunk costs of renting
A sunk cost is a cost that can never be recovered in the future.

Renting sunk costs:

Sunk costs can be defined by the amount you pay in rent each year, so if your payments are $500 a week, the sunk cost of renting is:

 $500 x 52 weeks = $26,000 per annum

Buying a home sunk costs:

When repaying a mortgage, you have a portion going towards interest and a portion going to paying back the principal of the loan.

The payback of the loan’s principal is not a sunk cost, as the quicker you pay off your debt, the faster you own the asset outright.  Once you own it, you can sell it and cash in.

The interest, on the other hand, is the unrecoverable part of your payment because when you sell your property, you won’t recoup that cost. To calculate the sunk cost, you need to understand the amortisation of the loan.

Let’s say you are buying a property in Brisbane for $500,000 with a 20% deposit and a 3% interest rate. You will realise that the sunk cost would be $11,886 per annum

Mortgage amortisation schedule





Jan 2021




Feb 2021




Mar 2021




Apr 2021




May 2021




Jun 2021




Jul 2021




Aug 2021




Sept 2021




Oct 2021




Nov 2021




Dec 2021




2019 total





Owning a home incurs other fees such as property taxes rates and insurance and maintenance—this is generally 1% of the property value each year. In this example, it is $5,000 a year in additional costs.

There are also entry and exit costs—this includes the purchase costs of stamp duty,  which ranges from 1-6% depending on the state, and sale costs, such as real estate agent’s commission which, depending on the state, ranges from 1-3%. If we take the worst-case scenario, we can say sunk costs are 10% to enter and exit the market. 

So, the total sunk costs for the property can get up to $25,000 per annum, which is less than the $26,000 sunk cost to rent. So, in this scenario, it is better to buy than to rent.

With property values going up the way they are, you also have an advantage of increased equity if you buy property. For example, we have a client who bought their home for $800,000 in Jan 2021, and 10 months later, the property was valued at more than $1M! 

So, it looks like the numbers are in support of buying!

Speak to our team of experts today

At Hunter Galloway, we are experts in getting home loans approved and work with several banks that specialise in helping first-home buyers.

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If you would like to chat about buying a home and need finance, give us a call on 1300 088 065 or book a free assessment online to speak with one of our experienced mortgage brokers.

We will give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table!

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