Test two equal-budget housing scenarios
Renting and buying have different cash flows, risks and lifestyle trade-offs. This calculator compares modelled wealth after a chosen period by giving each scenario the same monthly budget and allowing unused cash to earn the entered investment return.
The result is not a verdict on whether to buy or rent. It is sensitive to property growth, rent growth, rates, transaction costs, owner costs and investment returns, all of which can change materially in real life. Security of tenure, location, flexibility and maintenance responsibilities are important personal considerations that the numbers cannot rank.
How to read the results
Scenario wealth difference compares buy scenario wealth with rent scenario wealth at the end of the selected period. Buy wealth includes projected property value less selling costs and remaining debt, plus any buyer investment balance.
Rent wealth is the renter’s starting deposit and buying-cost amount, plus invested monthly budget differences. Buyer monthly cost is the calculated loan repayment plus annual owner costs divided by 12; tax is excluded.
Worked example
With the default $850,000 property, $170,000 deposit and 6.34% 30-year loan, buyer monthly cost is about $4,893, including $8,000 annual owner costs. Over 10 years, the property is projected at $1,199,009 and debt at about $574,145.
After assumed 2% selling costs, buy scenario wealth is about $600,884. The rent scenario, beginning with $205,000 invested and paying rent starting at $650 weekly, reaches about $595,433; buying is higher by about $5,451 in this model.
Assumptions and limitations
- The loan is $680,000 and uses constant monthly principal-and-interest repayments over 30 years.
- Property growth is 3.5% annually and renter investment return is 5% annually.
- Rent begins at $650 per week and grows by 3% each year.
- Owner costs are $8,000 each year and buying costs are $35,000 upfront.
- Selling costs are 2% of the projected future property value, with tax excluded.
Frequently asked questions
Why does the renter start with buying costs invested?
The model treats the deposit and buying costs avoided by renting as funds available for the renter’s investment scenario.
Does it include capital gains tax or rent assistance?
No. Tax, government payments, insurance, maintenance beyond entered owner costs and personal circumstances are excluded.
What if buying costs exceed my cash?
The model can illustrate the outcome, but it does not test affordability, lender policy or whether settlement funds are available.
This calculator and supporting information provide general estimates only. They do not take account of every product rule, tax consequence or personal circumstance and are not financial, tax, credit or legal advice.