Rent vs Buy Calculator

How the break-even is calculated

The comparison runs year by year rather than as a single sum, which is why it can name a break-even year at all. The monthly mortgage payment is the standard amortisation formula on the loan after your deposit: principal times the monthly rate times one plus the monthly rate to the power of the number of payments, all over that same power minus one. Each year the model adds a year of payments, property tax at your percentage of the current home value and maintenance at your percentage of the same, then walks the twelve months one at a time to work out how much principal was actually paid — interest first, principal second — so the equity figure is real amortisation rather than a straight line.

The buying side is then netted: everything paid in, plus the deposit and closing costs, minus the equity you would hold, plus the cost of selling. Closing costs are fixed at three per cent of the purchase price and selling costs at six per cent, and both are ours rather than a quoted local figure — they are in the right region for a lot of markets and wrong for some. The renting side is the rent paid so far, compounded by your annual increase. The break-even year is the first year the netted buying cost falls below the rent paid, and it can be reported as "never" inside your timeline.

The wealth comparison is the second calculation and it is deliberately generous to renting: the deposit and the closing costs are treated as invested instead, compounding at seven per cent a year. That seven per cent is an assumption, not a forecast, and it is the single figure most likely to flip the verdict. Under three years the tool refuses to declare a winner and says buying is risky instead, because the transaction costs at both ends dominate everything else over a stay that short. Nothing here accounts for tax relief on mortgage interest, stamp duty or its equivalents, or a market that falls.

Every figure above was read out of the code that runs on this page. Where a number is our own judgement rather than a published one, the note says so and cites nothing. Method last checked 21 August 2026.