๐ Rent vs. Buy Calculator
This does not account for changes in property value โ it's a simple comparison of total cash paid. Consult a professional before making a real decision.
Enter your monthly rent, along with a home's purchase price, down payment, mortgage interest rate, loan term, annual property tax and maintenance costs, and a comparison period, to compare the total cash cost of continuing to rent versus buying a home over that period.
How to use
- Enter your current (or expected) monthly rent.
- Enter the home's purchase price, down payment, mortgage interest rate, and loan term.
- Enter annual property tax and maintenance costs and the comparison period (in years) โ the total cost of renting and buying are calculated automatically.
How the calculation works
This tool compares the total cash paid over a chosen period if you keep renting versus if you buy a home. Total cost of renting = monthly rent ร months in the period Total cost of buying = down payment + loan payments in the period + annual property tax and upkeep ร years The monthly loan payment uses the standard fixed-payment (amortizing) formula: Monthly payment = loan ร monthly rate ร (1 + monthly rate)^payments รท ((1 + monthly rate)^payments โ 1) When you buy, the principal part of your payments becomes equity in the home, while interest, property tax and upkeep are gone for good. So the tool also shows the loan balance at the end of the period, the interest paid, and the unrecoverable cost of buying (interest + property tax and upkeep). All rent is unrecoverable, so comparing the total cost of renting with the unrecoverable cost of buying gives a different view from comparing total cash paid.
Worked example
Rent ยฅ120,000, home price ยฅ40,000,000, down payment ยฅ8,000,000 1.5% interest, 35-year loan, property tax and upkeep ยฅ300,000 a year, 10-year comparison Monthly loan payment: about ยฅ97,979 Total cost of renting: 120,000 ร 120 months = ยฅ14,400,000 Total cost of buying: 8,000,000 + about 11,760,000 + 3,000,000 โ ยฅ22,760,000 Loan balance after 10 years: about ยฅ24,500,000 Interest paid: about ยฅ4,260,000 Unrecoverable cost of buying: 4,260,000 + 3,000,000 โ ยฅ7,260,000
Things to be aware of
- The future sale price of the home cannot be predicted, so it is not included. What the home is worth later makes a big difference to whether buying pays off.
- Lease renewal fees, rent increases, purchase costs (agent fees, registration and so on, typically 6โ9% of the price in Japan) and mortgage tax credits are not included.
- With a variable-rate loan, payments change when the rate changes.
- Buying a home is a major decision. Consider talking to a financial planner or other professional before deciding.
FAQ
Does this factor in home price appreciation?
No. Future changes in property value are highly uncertain, so this tool is designed as a simple comparison of total cash paid out. It does not account for the home's resale value.
How is the monthly mortgage payment calculated?
It uses the standard fixed-payment (amortizing) loan formula that computes a level monthly payment from the loan amount, interest rate, and number of payments.
What if the comparison period is shorter than the loan term?
Only the loan payments actually made during the comparison period count toward the cost of buying. The loan balance still owed at the end and the interest part of the payments are shown as well, so you can see how much you still owe and how much of what you paid went into equity through principal repayment.