Net wealth over time
- Buying
- Renting
Show year-by-year table
| Year | Home value | Mortgage owed | If you buy | If you rent |
|---|
How the comparison works
Both options start with the same cash: your deposit plus stamp duty and buying fees. If you buy, that cash goes into the home, and each month you pay the mortgage plus maintenance. If you rent, the same cash is invested instead, and you pay rent.
In any month where one option is cheaper, the saving is invested at your chosen return. At the end we compare your net wealth: for a buyer, the home's value less selling costs and the mortgage still owed, plus any savings; for a renter, the invested pot.
What tips the balance
- Time: stamp duty, fees and selling costs are fixed hits. The longer you stay, the more time you have to recover them.
- House price growth: a mortgage magnifies price changes on your deposit, both up and down.
- Interest rates vs rent: early mortgage payments are mostly interest, which, like rent, is money you don't get back.
- Investment returns: the higher the return on savings, the more renting is worth.
Assumptions
- One mortgage rate for the whole period, on a repayment basis. Investment returns are before tax, as if held in an ISA.
- Growth and rent rises are steady every year. In reality they go up and down.
- Service charges, ground rent and the cost of furnishing are not included. Add them to maintenance if they apply.