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The fair comparison isn't rent vs mortgage payment: it's rent vs the UNRECOVERABLE part of owning (mortgage interest + maintenance ~1% of value/yr + buying costs spread + insurance). The repayment part of the mortgage is savings, not spending. Buying usually wins over long horizons and loses over short ones (moving inside ~5 years rarely recovers stamp duty + fees): the crossover depends on house price growth nobody can promise you. This is a framework, not a forecast: see our mortgage affordability and stamp duty pages for the full picture.
What The Rent Vs Buy Calculator Works Out
- Monthly: rent vs mortgage: the rent against a 25-year repayment mortgage on the price less your deposit. This is the headline everyone quotes and it flatters whichever side is momentarily cheaper, because it treats the repayment part of the mortgage as spending when it is actually saving.
- The fairer comparison: rent against owning's unrecoverable cost, which is mortgage interest (balance x rate / 12) plus maintenance at 1% of the value a year. On a GBP 280,000 home with 10% down at 4.5% that is about GBP 945 of interest plus GBP 233 of upkeep, against GBP 1,200 of rent.
- What the simple sums miss: whether owning's dead money is above or below the rent, and the horizon and flexibility arguments that go with it. Buying needs roughly five years to recover stamp duty and fees whatever prices do.
- Term and maintenance (advanced): override the built-in 25-year term and 1% upkeep assumption. Flats with service charges and older houses often run nearer 1.5% to 2%.
- Years you expect to stay, price growth and rent rises (advanced): the simulation runs month by month for your horizon, growing the home's value and stepping the rent up once a year. UK house prices have averaged roughly 3% to 5% a year over long periods but individual five-year windows have fallen; rents have risen faster than that recently.
- Return on the invested deposit (advanced): the renter's counterfactual. The deposit and buying costs are invested at this rate, and each month the renter also invests (or draws down) the gap between the owner's outlay and the rent. Around 4% to 5% is a reasonable long-run assumption for a cautious portfolio, 6% to 7% for equities before fees.
- Buying costs (advanced): stamp duty, conveyancing and survey. A first-time buyer pays no stamp duty up to GBP 300,000; a mover pays 2% between GBP 125,000 and GBP 250,000 and 5% above. Legal and survey fees typically add GBP 1,500 to GBP 3,000.
- Verdict after N years (advanced): the buyer's equity (home value minus mortgage balance) against the renter's investment pot. A positive gap means buying was ahead at the end of the period, before selling costs of about 1% to 2% of the value.
- Owning's dead money and rent paid (advanced): cumulative interest, upkeep and buying costs against cumulative rent, with a year-by-year table showing how the two wealth positions evolve. Both sides burn money monthly; the question is which pile is smaller in your numbers and your decade.