Rent or buy: choose fair assumptions
Last reviewed:
The useful comparison is what each route leaves you with after the same time, starting cash and monthly budget.
Use equal resources
A deposit invested by a renter has an opportunity cost to the buyer. Mortgage principal builds equity, whereas interest is a cost. Our calculator tracks those separately, invests unused monthly budget on either side, and subtracts the remaining mortgage and selling costs at the end.
Make the starting cash explicit
An illustrative buyer uses £30,000 deposit and £5,000 purchase costs. A fair starting point gives the renter £35,000 to invest, not £30,000. If ownership costs £1,500 a month and renting costs £1,200, a common £1,500 budget leaves the renter £300 to invest. Over a year that is £3,600 of contributions before returns. These inputs illustrate the method rather than typical prices.
Include the costs that move the answer
Use the right purchase-tax jurisdiction and buyer circumstances. Include legal and survey fees, mortgage charges, maintenance, insurance and any service charges; include selling expenses too. The calculator exposes assumptions instead of supplying a guaranteed future house price or investment return.
Test the uncertain inputs
Run a shorter stay and weaker house-price growth. Then try lower investment returns or faster rent increases. The house-price sensitivity table changes one assumption at a time, so it cannot capture every combination. A numerical difference is not a recommendation: flexibility, security and the home itself also matter.