Rent or buy comparison calculator

Should you rent or buy?

It’s the age-old question - and the answer ultimately depends on your financial situation, lifestyle, and goals.

Buying your own home offers stability while renting offers flexibility. Owning a home can come with high upfront costs for long-term gain while renting may mean lower short-term costs without the wealth boost that owning your own home has historically delivered.

How to use the rent vs buy calculator

Our calculator is designed to show you how your finances will look over a period of time should you rent or buy a home.

You will need some information on hand (or good estimates), including:

Renting

• Weekly rent

• Quarterly electricity bill

• Quarterly gas bill (if applicable)

• Quarterly water bill (if applicable)

• Current savings balance

• Monthly savings amount

• Savings account interest rate

Buying

• Property price

• Home loan amount required

• Loan term

• Interest rate

• State or territory you are purchasing in

• Loan set-up costs

• Lender’s mortgage insurance (if applicable)

• Bills including electricity, gas, water

• Quarterly council rates

• Monthly home insurance

• Annual property maintenance costs

There are some assumptions built into the calculator, but you're able to change some of these according to your circumstances, local data, or future plans. (For assistance with property estimates, see median house prices around Australia and property data for every suburb .)

Your Mortgage’s Rent vs Buy Calculator will compare your projected financial position for both rent and buy options for a period of up to 30 years.

When it is better to buy?

There are a few general ground rules that apply:

• When you plan to live somewhere longer term

If you can see yourself living in an area for the next five to 10 years, the higher short-term costs of buying (e.g. home loan fees , stamp duty , etc.) may be more than recouped by the amount of equity you’ll likely build in your home.

• You have a regular income and savings

Home lenders generally require borrowers to have stable employment and savings. If you can tick both boxes, you are probably in a good position to buy.

• You want stability or more control over your where you live

If you feel unsettled by the prospect of having to move every year, want your living space to be a certain way, or love your pets and find it hard to secure suitable rentals, buying can be the right choice for you.

• When it’s a ‘buyer’s market'

At times when interest rates are low, demand is suppressed, and property prices are reasonable, owning your own home can be a good investment as well as giving you somewhere to live.

• You want to build wealth

Property is one of Australia’s most reliable - and popular - long-term investment vehicles. Buying can see your money go towards creating capital gains for yourself, rather than helping pay someone else’s mortgage on their investment property. Of course, no investment is guaranteed to provide returns and some might result in losses.

• You are preparing for retirement

You’ll be more financially secure in retirement if you own your home.

When is it better to rent?

• When you need to be flexible in your living arrangements

If you foresee you may need to move or relocate for work or personal reasons, renting offers the flexibility to pack up and leave (although perhaps with lease break fees).

• When you want to minimise your weekly expenses

Renting can generally see you pay less on housing than a person making mortgage repayments, allowing you to direct funds towards other purposes. However, this rule of thumb can change depending on prevailing economic conditions.

• When you have limited savings

You need substantial savings to cover a home loan deposit, stamp duty, and associated loan costs, including lenders mortgage insurance should it apply. Not having a good cash base can see you struggle to maintain a home loan from the outset.

• When it is a ‘seller’s market’

The Australian property market has historically gone through cycles although has generally delivered high long-term growth. Renting can be a way to keep watching the market and purchasing when the right opportunity presents itself.

• When you’re not ready to take on the responsibility of home ownership

Buying a home involves not only home loan repayments but paying rates and insurances and staying on top of maintenance and repairs. If can be better to rent if you’d prefer that was handled by others.

See also : Renting vs buying: Which is more affordable in Australia’s capital cities?

Brooke Cooper

Editor, Your Mortgage

What the expert says:

"The decision between buying and renting is both a financial and an emotional one. Buying typically demands significant upfront costs and ongoing expenses, but generally offers more stability and the chance to build equity over time.

Renting, on the other hand, offers flexibility, less maintenance, and can be cheaper day‑to‑day (though that’s not always the case). The key long-term financial difference is that rents tend to rise with inflation, whereas mortgage costs are more stable over the long term, with interest rates being the most common variable."

Costs of buying a home

Stamp duty

Stamp duty is a one-off tax levied by state and territory governments on the sale of a property. The cost varies depending on the state and whether the buyer may be eligible for an exemption or discount.

See also : Stamp duty calculator

Legal and conveyancing fees

Buying a home generally requires the services of a solicitor or professional conveyancer to ensure the smooth transfer of property between seller and buyer. This service also includes conducting necessary searches to ensure there are no issues with the home, such as unpaid rates or zoning concerns. Fees can cost anywhere between $800 to $3,000 depending on complexity and the service engaged.

Mortgage application fees

Some lenders charge an application fee to establish a new home loan which may cost up to $800 although some will offer no-fee application but may levy other charges. Be sure to inquire with prospective lenders as to their upfront loan costs.

See also : A complete guide to Australian home loan fees

Building and pest inspection

Building and pest inspections can be a vital step in purchasing a home before signing on the dotted line. These can cost anywhere between $400 - $800 depending on the size of the home, location, and accessibility.

Mortgage registration and transfer fees

These state and territory government fees are another unavoidable cost of buying a new home. Mortgage registration and transfer fees are levied by the relevant land registry or title office with costs varying according to the state or territory.

Insurance

You should take out home (or building) insurance upon signing a contract of sale to purchase a home. This requirement can vary slightly between states and territories but is designed to ensure the property is covered throughout the transfer period. Many lenders also require proof of insurance before a home loan becomes unconditional. Home insurance varies greatly depending on location and level of cover, but it generally costs several thousand dollars a year.

Removal fees

The cost of moving your belongings into your new home also needs to be taken into consideration. This cost will depend on how much and how far you are moving. It can also run into several thousand dollars.

See also : Everything you need to know about moving interstate in Australia