Mortgage vs Rent Calculator UK
Should you rent or buy? Compare the true monthly and long-term cost of a mortgage against renting — including the hidden costs and the equity you build — to find your break-even point.
“Rent is dead money” and “the mortgage is cheaper than renting” are the two slogans that drive most rent-versus-buy decisions — and both are too simple to trust. The honest comparison is harder, because the costs on each side are hidden in different places. A buyer’s real monthly cost isn’t just the mortgage: add maintenance, buildings insurance, and the deposit and fees tied up upfront. A renter’s real position isn’t just the rent: a renter who invests the money a buyer sinks into a deposit can build wealth too. This calculator strips away the slogans and compares the genuine cost of each path, the equity a buyer accumulates, and the break-even point — the year at which buying overtakes renting. Once you know your number, model the loan itself with the Mortgage Calculator.
Buying assumptions
Buying costs
Renting assumptions
Buy vs rent result
Estimated better option
Calculating…
Calculating…
Net buying position
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Net renting position
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Difference
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Break-even estimate
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Monthly mortgage
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Equity after period
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Buy vs rent — the true monthly cost
The left table shows the genuine monthly cost of owning, which is more than the mortgage alone, against a comparable rent. The right shows the equity a buyer builds purely from repaying capital (before any house-price change). Both use a £300,000 home, 10% deposit, £270,000 loan at 5% over 25 years as the example. The calculator above runs your own figures.
| Cost | Owning | Renting |
|---|---|---|
| Mortgage | £1,578 | — |
| Maintenance | £250 | £0 |
| Insurance | £30 | £0 |
| Rent | — | £1,400 |
| Total/mo | £1,858 | £1,400 |
| Year | Capital repaid | Balance left |
|---|---|---|
| 1 | £5,567 | £264,433 |
| 3 | £17,570 | £252,430 |
| 5 | £30,833 | £239,167 |
| 10 | £70,404 | £199,596 |
| 15 | £121,187 | £148,813 |
Two surprises hide in these tables. First: owning costs £1,858 a month here, not £1,578 — the maintenance and insurance that “the mortgage is cheaper than rent” conveniently forgets push it £458 above the £1,400 rent. Second: in the early years, the buyer’s equity grows slowly (only £5,567 in year one) because the mortgage is front-loaded with interest. The real comparison has to weigh that slow-building equity against what a renter could do with the £458 difference and the deposit they never tied up.
How the rent vs buy comparison really works
The reason rent-versus-buy is so contested is that the two sides hide their costs in different places. A fair comparison has to surface all of them. Done properly, it’s not “is the mortgage less than the rent” — it’s “which path leaves me better off after all costs, over the time I’ll actually stay“. Three things drive the answer: the true cost of each side, the equity a buyer builds, and how long you hold the property.
The true cost of owning
The mortgage payment is only the visible part. A homeowner also pays for maintenance — boilers, roofs, decorating, the slow entropy of a building — which runs at roughly 1% of the property’s value a year as a rule of thumb. Add buildings insurance, ground rent and service charges if it’s a leasehold flat, and the upfront costs that don’t recur but do tie up cash: the deposit, stamp duty, and legal and survey fees. None of these appear in the “my mortgage is cheaper than your rent” comparison, yet they can add hundreds a month and tens of thousands upfront.
The true cost of renting
Renting looks simpler — rent, and maybe a deposit held in a protection scheme — and it is. The renter pays no maintenance (the landlord does), no buildings insurance, no stamp duty, and crucially keeps the deposit and fees liquid. The honest renter’s case isn’t “rent is dead money”; it’s that a renter who invests the money a buyer sinks into a deposit, plus any monthly difference, can build a comparable pot. Rent does rise over time, which counts against renting — but a renter isn’t exposed to maintenance shocks or interest-rate rises.
Equity: the buyer’s quiet advantage
Each mortgage payment converts a slice of cost into capital you own, and over a long enough period the buyer ends up owning the home outright. On top of that, the property may rise in value, magnifying the equity. This is the buyer’s structural advantage — but it’s slow to arrive, because early payments are mostly interest, and it depends on house prices rising, which isn’t guaranteed.
The break-even point
Buying carries large upfront costs — deposit, stamp duty, fees — that you don’t recover if you sell quickly. So in the early years, renting is almost always cheaper on a total-cost basis. The break-even point is the year at which the buyer’s accumulated equity and avoided rent overtake the renter’s invested pot. Below it, renting wins; above it, buying wins. The break-even is highly sensitive to house-price growth and how long you stay: with strong price growth it can be as little as a few years; with flat prices and a short stay, buying may never beat renting once selling costs are counted.
Four worked examples
Four buyers and renters in different situations, showing how the answer flips depending on time horizon, price growth, and what the renter does with the difference.
Example 1 — Olu (short stay, two years)
£300k home, planning to move in two years
Equity from repayment after 2yr: ~£11,400
Selling costs (agent, legal): ~£5,000
Verdict: renting wins — too short to recover upfront costs
Olu’s job might relocate him within two years. Buying makes little sense here: the £7,000 of stamp duty and fees, plus another £5,000 to sell, dwarf the modest equity he’d build in two years of mostly-interest payments. Unless house prices jump sharply, he’d lose money on the round trip. For anyone likely to move within three to five years, renting is usually the safer financial call — the upfront costs of buying need time to amortise.
Example 2 — Priya (long stay, ten years)
£300k home, settled, staying a decade-plus
Plus modest house-price growth on £300k
Renter’s invested pot (10yr): ~£132,000
Verdict: close — tips to buying with any price growth
Priya is settled and staying long-term. Over ten years she repays £70,000 of capital, and even modest house-price growth adds tens of thousands more in equity. The renter who invested the difference builds a respectable pot too — around £132,000 — so on these numbers it’s genuinely close. The tie-breaker is house-price growth: with any meaningful rise, buying pulls ahead, and Priya also ends with a home she’ll eventually own outright and a payment that (unlike rent) stops rising.
Example 3 — Sam (disciplined renter)
Rents, invests the deposit and the monthly difference
Pot after 15 years: ~£200,700
Buyer’s equity from repayment (15yr): £121,187 + growth
Sam makes the renter’s case properly. Instead of a deposit, he invests £37,000, and instead of the higher monthly cost of owning, he invests the £458 difference each month. After fifteen years his pot is around £200,000. This beats the buyer’s repayment equity alone — but the buyer also has house-price growth, which can close or reverse the gap. The crucial caveat: Sam’s case only works if he actually invests the difference. Most renters spend it, which is why buying often wins in practice even when renting wins on a disciplined spreadsheet.
Example 4 — The Khans (rent rises bite)
Renting long-term as rents climb
Buyer’s mortgage (fixed portions): broadly stable
Verdict: rising rent erodes the renter’s edge over time
The Khans rent in a rising market. Their £1,400 rent climbs with inflation — at 3% a year it reaches around £1,827 within a decade, and keeps going. A buyer’s mortgage, by contrast, doesn’t rise with inflation; the capital portion is fixed in cash terms and shrinks in real terms as wages grow. This is the renter’s long-term vulnerability: rent compounds upward indefinitely, while a repayment mortgage eventually ends entirely. Over a 25-year horizon, this asymmetry is one of the strongest arguments for buying.
The true cost of each side — what the slogans hide
Both “rent is dead money” and “the mortgage is cheaper than renting” survive because each ignores half the picture. A real comparison lays out every cost on both sides, including the invisible ones. Here’s what each path actually involves once you stop quoting slogans and start counting:
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1
What buying really costs
Not just the mortgage. Add maintenance (~1% of value/year), buildings insurance, and any leasehold charges — plus the upfront deposit, stamp duty, and legal fees that tie up cash you can’t easily get back.
On a £300k home, the true monthly cost is around £1,858, not the £1,578 mortgage — and ~£37,000 is locked up before you start.
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2
What renting really costs
Simpler and lower month to month — no maintenance, no insurance, no stamp duty, and the deposit stays liquid. But rent rises over time, and you build no equity at all.
The renter’s real opportunity: invest the deposit and monthly difference. A disciplined renter can build a pot rivalling a buyer’s equity — if they genuinely invest rather than spend it.
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What tips the balance
Two factors decide it: how long you stay and what house prices do. Short stays favour renting (upfront costs don’t amortise); long stays favour buying (equity builds, rent compounds).
Price growth is the wildcard — strong growth makes buying win early; flat prices and a quick sale can mean buying never beats renting once selling costs are counted.
Buyer vs disciplined renter after 10 years (£300k example)
Net wealth built by each path, repayment equity only:
On these numbers, after a decade the buyer and the disciplined renter end up remarkably close — around £136,000 of buyer equity (with modest price growth) against £132,000 in the renter’s invested pot. That’s the real lesson: it’s far closer than either slogan admits, and the winner depends on assumptions you can’t know in advance. House prices might grow faster or slower; the renter might or might not invest the difference; you might stay two years or twenty.
Why “rent is dead money” misleads
The slogan ignores that mortgage interest is dead money too. In the early years of a repayment mortgage, the bulk of each payment is interest — money paid to the lender that builds no equity, exactly like rent paid to a landlord. On a £270,000 loan at 5%, the first year’s payments are over £13,000 of interest against just £5,567 of capital. The renter’s “wasted” rent and the buyer’s “wasted” interest are more alike than the slogan suggests; the buyer’s genuine advantage is the slowly growing capital slice and any price appreciation, not some magic absence of waste.
The flip side — “renting is cheaper, so always rent” — fails for the opposite reason: it assumes the renter invests the difference, which most people don’t, and ignores that rent rises indefinitely while a mortgage ends. The truthful answer is that neither path is universally better. It depends on your time horizon, your discipline, your local market, and your need for stability — which is exactly why a calculator that surfaces all the costs beats any slogan.
Two scenarios that flip the answer
What if…
House prices grew 4% a year?
What if…
You only stay three years?
Key rent vs buy terms explained
A fair rent-versus-buy comparison borrows vocabulary from mortgages, investing, and economics. The ten terms below cover what you’ll need to weigh the two paths honestly.
- Equity
- The share of a property you own outright — its value minus the outstanding mortgage. A buyer builds equity through capital repayment and house-price growth; a renter builds none. It’s the buyer’s structural advantage, but it accumulates slowly because of front-loaded interest.
- Opportunity cost
- The return you give up by tying money in one place rather than another. A buyer’s deposit and fees could otherwise be invested; the foregone investment return is the true cost of locking that cash into a home. The renter’s case rests heavily on this idea.
- Break-even point
- The year at which buying overtakes renting once all costs are counted. Below it, renting is cheaper; above it, buying wins. Highly sensitive to house-price growth and length of stay — strong growth shortens it, a quick sale can mean it’s never reached.
- Maintenance cost
- The ongoing upkeep an owner pays and a renter doesn’t — repairs, replacements, decorating. A common rule of thumb is around 1% of the property’s value a year. On a £300k home that’s roughly £250 a month, a cost the “mortgage is cheaper than rent” comparison usually ignores.
- Front-loaded interest
- The way a repayment mortgage charges most interest in the early years, when the balance is largest. It means a buyer builds equity slowly at first — much of an early payment is interest, which builds no ownership, exactly like rent.
- Invest the difference
- The renter’s strategy that makes the renting case work: investing the deposit a buyer would tie up, plus any monthly cost difference. Done consistently, it can build a pot rivalling a buyer’s equity — but only if actually invested, which most renters don’t do.
- House-price growth
- The annual rate at which property values rise (or fall). The single biggest wildcard in the comparison: strong growth makes buying win decisively, while flat or falling prices can leave buying behind renting. Unknowable in advance, so best modelled across a range.
- Negative equity
- When a property is worth less than the mortgage owed on it, after prices fall. A buyer’s risk that a renter never faces — it can trap you in a home you can’t sell without crystallising a loss. The flip side of buying’s exposure to house-price growth.
- Transaction costs
- The one-off costs of buying and selling — stamp duty, legal fees, surveys, and estate agent fees. They typically run to several percent of the price each way, and are why short stays favour renting: there isn’t time to recover them before you sell.
- Rent inflation
- The tendency of rent to rise over time, often broadly with inflation or local market pressure. The renter’s long-term vulnerability: rent compounds upward indefinitely, while a repayment mortgage’s capital portion is fixed in cash terms and eventually ends entirely.
Five mistakes people make comparing rent and buy
Rent-versus-buy is where good intentions meet bad maths. These five errors, common on both sides of the debate, lead people to the wrong conclusion with total confidence.
Comparing the mortgage to the rent, full stop
“My mortgage would be £1,578, rent is £1,400, so buying’s nearly the same” ignores maintenance, insurance, and the cash tied up in a deposit. The true cost of owning is closer to £1,858 a month here, plus ~£37,000 upfront. Always compare the full cost of owning, not just the mortgage line.
Cost: underestimating owning by £300+/mo Fix: add maintenance, insurance, and upfront costsBelieving “rent is dead money”
Rent builds no equity — but in a mortgage’s early years, most of the payment is interest, which builds no equity either. On a £270k loan at 5%, year one is over £13,000 of interest against £5,567 of capital. The buyer’s real gain is the small capital slice plus price growth, not some magic absence of waste.
Cost: buying for the wrong reason Fix: see early mortgage interest as “rent” tooBuying for a short stay
Buying carries large upfront costs — stamp duty, legal fees, survey — and selling costs another few percent. Over a stay of under five years, these swallow most of the equity built, so renting usually wins. Buying needs time to amortise its transaction costs before it pays off.
Cost: £10,000+ lost on a quick round trip Fix: only buy if staying ~5+ yearsAssuming the renter invests the difference
The renting case depends on investing the deposit and monthly difference — but most renters spend it. A spreadsheet where the renter diligently invests £37k plus £458 a month looks great; real life rarely matches it. Buying often wins in practice precisely because the mortgage forces a kind of saving discipline renting doesn’t.
Cost: the renting case collapsing in reality Fix: only count investing you’ll genuinely doTreating house-price growth as guaranteed
A buyer banking on prices rising forever can be caught by a flat or falling market — and unlike a renter, a buyer can end up in negative equity, trapped in a home worth less than the loan. Model the decision across a range of growth assumptions, not just an optimistic one, and never buy on the assumption prices only go up.
Cost: negative equity in a downturn Fix: test flat and falling price scenarios tooFrequently asked questions
Is it cheaper to rent or buy in the UK?
It depends on how long you stay and what house prices do — there’s no universal answer. Month to month, renting is often cheaper than the true cost of owning, because owning means a mortgage plus maintenance, insurance, and tied-up cash. On a £300,000 home, owning can cost around £1,858 a month against £1,400 rent.
But buying builds equity and a mortgage eventually ends, while rent rises forever. Over a long stay with rising prices, buying usually wins; over a short stay or flat market, renting does. The break-even point — where buying overtakes renting — is the figure that actually answers the question for your situation.
Is “rent is dead money” actually true?
Only partly. Rent builds no equity — but in the early years of a mortgage, most of your payment is interest, which builds no equity either. On a £270,000 loan at 5%, the first year is over £13,000 of interest against just £5,567 of capital repaid.
So the buyer’s “wasted” interest and the renter’s “wasted” rent are more alike than the slogan suggests. The buyer’s genuine advantage is the slowly growing capital slice and any house-price growth — not a magical absence of waste. It’s a real advantage, but it’s smaller and slower than the slogan implies.
How long do I need to stay for buying to be worth it?
As a rough guide, around five years or more, though it varies with house-price growth. Buying carries large upfront costs — stamp duty, legal fees, survey — plus selling costs of a few percent at the other end. Over a short stay, these swallow most of the equity you’d build.
If you might move within three years, renting is usually the safer financial choice. The longer you stay, the more the transaction costs amortise and the more equity accumulates, tilting the balance toward buying. Strong house-price growth shortens the break-even; flat prices lengthen it.
What costs do buyers forget when comparing to renting?
The big ones are maintenance (roughly 1% of the property’s value a year), buildings insurance, and any leasehold service charges or ground rent. On top of those recurring costs are the upfront ones that tie up cash: the deposit, stamp duty, legal fees, and a survey.
Renters avoid all of these — the landlord covers maintenance and insurance, there’s no stamp duty, and the deposit stays liquid. Leaving these out is why “my mortgage is cheaper than your rent” almost always overstates the case for buying.
Does the renter really come out ahead by investing the difference?
They can, on paper. A renter who invests the deposit a buyer would tie up (around £37,000 on a £300k purchase) plus any monthly cost difference can build a pot rivalling a buyer’s equity — roughly £200,000 over fifteen years at a 5% return in our example.
The catch is the word “disciplined”. Most renters spend the difference rather than investing it, which is why buying often wins in practice even where renting wins on a spreadsheet. A mortgage forces a kind of saving; renting only matches it if you replicate that discipline yourself.
How does house-price growth change the answer?
It’s the single biggest factor. With strong growth — say 4% a year — a £300,000 home is worth around £444,000 after a decade, handing the buyer £144,000 of price gain on top of capital repaid. That makes buying win decisively.
But it cuts both ways: flat or falling prices can leave buying behind renting, and a buyer can end up in negative equity, trapped in a home worth less than the loan. Because growth is unknowable in advance, it’s wise to model the decision across a range — optimistic, flat, and pessimistic — rather than banking on one.
Isn’t buying always better because rent rises over time?
Rising rent is a genuine point in buying’s favour. Rent tends to climb with inflation — at 3% a year, a £1,400 rent reaches around £1,827 within a decade and keeps rising — while a repayment mortgage’s capital portion is fixed in cash terms and eventually ends entirely.
Over a long horizon this asymmetry strongly favours buying. But it doesn’t make buying “always better”: a short stay, a falling market, or a renter who invests well can each reverse the conclusion. Rising rent is one weight on the scale, not the whole scale.
Should I rent or buy if I’m not sure how long I’ll stay?
Uncertainty itself favours renting. Buying only pays off once its upfront costs amortise, which takes years, so if there’s a real chance you’ll move within three to five years, the flexibility of renting is worth the lost equity.
Renting lets you move cheaply for a job, a relationship, or a change of mind, without transaction costs or the risk of being unable to sell. If your life is settled and you expect to stay put, buying’s advantages have time to compound. If it isn’t, the option value of renting is genuinely valuable — don’t buy just because it feels like the “grown-up” thing to do.
Related calculators
The rent vs buy decision connects to the cost of the mortgage, the upfront tax, and what your money could earn elsewhere. These calculators handle each piece.
Methodology & sources
How the comparison works
The calculator builds the true monthly cost of owning — the mortgage repayment plus estimated maintenance (a percentage of property value) and buildings insurance — and compares it with rent. It tracks the buyer’s equity from capital repaid each month using standard amortisation, optionally adding house-price growth, and models a renter who invests the deposit and any monthly cost difference at an assumed return. The break-even point is the year at which the buyer’s net position (equity minus selling costs) overtakes the renter’s invested pot.
All figures are illustrative and depend heavily on assumptions you choose — rent level, maintenance rate, house-price growth, investment return, and length of stay. Small changes to these flip the result, which is why the tool is best used to test a range of scenarios rather than to produce one definitive answer.
Assumptions and conventions used
- True cost of owning: mortgage + maintenance (~1%/yr of value) + insurance
- Buyer equity: capital repaid (amortisation) + optional house-price growth
- Renter pot: deposit + fees + monthly difference, invested at an assumed return
- Break-even: year buyer’s net position overtakes renter’s invested pot
- Transaction costs: stamp duty, legal, survey on buying; agent + legal on selling
- Figures illustrative — outcomes depend entirely on chosen assumptions