Option 1: Use your deposit to buy a home with a mortgage. Option 2: Invest that same deposit and rent instead. Compare your estimated net wealth after the same number of years.
Currency changes symbols and formatting only — no exchange-rate conversion.
Compare your options
1. Buy a home
Use your deposit towards the purchase and repay the mortgage.
2. Rent a home
Pay rent instead of taking out a mortgage.
3. Invest instead of buying
The same deposit from Option 1 is invested, not spent on a home. Monthly savings from renting rather than owning are invested too; when renting costs more, the difference reduces the investment balance.
Projected outcome
Illustrative scenario, not a prediction. Both options start with the same deposit and monthly budget.
Model assumes fixed mortgage interest, monthly investment compounding, constant ownership expenses and annually compounded home/rent growth. Excludes income tax, investment tax, inflation adjustments and financing of negative cash flows. Results can change substantially with assumptions.
Understand this calculator
This comparison begins with one pool of money: your deposit. In the buying scenario you put it toward a property and take out a mortgage. In the renting scenario you invest that same deposit and pay rent instead. The model compares the resulting wealth under your assumptions.
How to use this calculator
- Buy a home
- Enter the purchase price, starting deposit, mortgage rate and term, expected property appreciation and ongoing ownership costs.
- Rent a home
- Enter the rent you would pay for a comparable home and an assumed annual increase in rent.
- Invest instead of buying
- The investment starts with the same deposit used in the buying scenario. Choose an assumed investment return and comparison horizon; you do not need a second deposit.
- Monthly cash-flow differences
- When owning costs more than renting, the renter can invest the difference; when renting costs more, the reverse cash-flow difference must be accounted for in a consistent comparison.
Formula and method
Homeowner wealth starts with property value minus remaining mortgage, plus or minus any separately modeled cash-flow investments. Renter wealth starts with the invested deposit, adjusted for investment growth and the monthly cost difference. This is a scenario comparison, not a universal rent-or-buy rule.
Worked example: one $100,000 deposit, two paths
Suppose you have $100,000 and are considering a $600,000 home. Buying uses the $100,000 as the deposit and finances the remaining $500,000. Renting instead leaves the $100,000 available to invest. At an illustrative 5% annual return, the initial $100,000 alone would grow to about $432,194 over 30 years with annual compounding, before tax and fees. A fair comparison must also model rent, mortgage payments, property appreciation, ownership expenses and how monthly cash-flow differences are invested or funded.
Understanding the results
- Buying wealth
- Estimated property value less the mortgage balance at the end of the selected period, adjusted for any modeled differences.
- Renting and investing wealth
- Estimated value of the invested deposit and modeled ongoing investment cash flows.
- Difference
- The gap between the two modeled outcomes. Small changes in property growth, investment returns or rent escalation can reverse the result.
Assumptions and common mistakes
- Transaction costs
- Purchase stamp duty, legal costs, selling agent fees and other one-off costs can materially affect the comparison.
- Different risk profiles
- Property appreciation and investment returns are uncertain; the two assets have different liquidity, concentration and volatility risks.
- Living expenses and taxes
- Maintenance, rates, insurance, tax treatment and the actual timing of cash flows can change the outcome. Check exactly which costs the calculator includes.
Frequently asked questions
Why invest the deposit when renting?
The deposit represents capital you would otherwise tie up in the property. Investing it provides an alternative use of the same starting money.
Does the model assume renting is cheaper?
No. The relative monthly costs depend on the entered rent, mortgage, ownership expenses and changes over time.
Can this calculator tell me whether to buy?
It can compare financial scenarios, but cannot account for every personal preference, housing-security consideration or future market outcome.