Buying
Renting
For a similar home.
After tax. What money not tied up in a home could earn.
More costs of owning
Mainly for flats.
Estate agent and legal fees when you sell.
The result
Where the money goes
| Buying | Renting |
|---|
Year-by-year table
| Year | Home value | Mortgage left | Wealth if you buy | Wealth if you rent | Difference |
|---|
How this works: "net wealth" for buying is what you would walk away with if you sold the home at that point (its value, minus the mortgage left, minus selling costs) plus any savings. For renting it is the deposit and buying costs you did not spend, invested, plus whatever you saved each month while renting was cheaper than owning. Whichever is cheaper each month, the difference is invested at your savings rate. The mortgage rate is assumed to stay the same, insurance and service charges stay flat, and maintenance rises with the home's value.
House prices, rents and investment returns are uncertain; small changes to them can flip the answer, so try a few. Buying also brings security and control over your home; renting brings flexibility. This is an illustration, not financial advice.