Buy versus Rent calculator

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How to fill in the boxes

Deposit: the amount of money you will put into the property (not including fees such as stamp duty), this comes from your savings but won't be all of them (unless someone else will pay your stamp duty and other fees), e.g. £ 20,000.

Mortgage interest rate: the annual interest rate on your mortgage, e.g. 5.5%.

Term (in years): how many years your mortgage will run for, e.g. 25 years.

Mortgage type: With a repayment mortgage at the end of the term you own the house. With an interest only mortgage at the end of the term you still owe exactly what you did at the beginning.

Total savings: the amount of money you have in the bank/buildingsociety/shares/whatever today, e.g. £ 35,000.

Savings interest rate: what annual return do you expect to get on your savings? (The calculator assumes that you save all of your spare cash after you have paid all your bills.), e.g. 4.0%.

Annual net salary: your annual take home pay, e.g. £ 30,000.

Alternative monthly rent: if you don't buy a house now what would your monthly rent be? e.g. £ 900 a month.

Monthly expenses: water/gas/electricity/food/holidays/transport/council tax/etc. Any expense/bill that you would have whether you rent or buy. These should include any 'discretionary expenses' since we assume that once you pay these (plus rent/mortgage/housing bills) you save the remainder of your salary e.g. £ 1200.

Monthly housing bills: the bills such as buildings insurance, house maintenance, ground rent or service charge which you only have if you buy (also highly dependent on the property), e.g. £ 200.

Expected retail price inflation: Your prediction for annual retail price inflation. The Bank of England is aiming for 2% but you may think that inflation is higher/lower than this. e.g. 4%

Expected house price inflation: Your prediction for the annual increase/decrease in house prices over the term of your mortgage? e.g. 2%. (If you believe we will see annual house price deflation enter a negative percentage e.g. -3%.) Expected rental inflation: How do you expect your rent to change over the years? For example you may believe that the buy-to-let market will keep rents low, e.g. 1%.

Expected wage inflation: The annual percentage increase you expect in your salary. (More than anything else how your salary changes in the future is highly individual.) e.g. 3.8%.

What if house prices crash at the time of purchase: Every first time-buyers nightmare scenario - you join the property market just as it plunges. What is the largest percentage drop you could imagine the day after you buy your house? e.g. 30%.

This calculator lets you play around with different scenarios of your future wealth (or debt)...
It should give you an idea of how buying a house would compare to renting over the long term given YOUR assumptions. We do not have a crystal ball if your assumptions prove to be wrong then the predictions of this calculator will also be wrong. However by trying out various worst/best case scenarios you can hopefully get an idea of what the risks/benefits of buying a house might be.

Disclaimer:
We accept no liability for the accuracy or reliability of this calculator.
We are not offering financial advice of any kind!

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