How to think about renting vs buying
Buying is not automatically better. A buyer pays interest, fees and repairs; a renter pays rent. What matters is who ends up with more wealth once the numbers play out.
What tips it towards buying
- Staying in the home for many years, so the buying and selling costs are spread out.
- A low mortgage rate, such as a KMRC-backed loan.
- Home prices and rents rising fast in your area.
What tips it towards renting
- High mortgage rates: at 14%, most of each early payment is interest.
- Moving within a few years.
- Actually investing the deposit and any monthly savings. Renting only wins if the renter invests.
Frequently asked questions
Does this include tax relief? No. Mortgage interest relief and Affordable Housing Levy relief can lower a buyer's tax, so check your own position.
Where can I invest a deposit fund? Money market funds, T-bills and Treasury bonds are common choices while you save.
How much will the mortgage cost in interest? Put the loan amount into the loan calculator with reducing balance to see every payment.
Renting out a property? Work out your monthly rental income tax with the rental income tax calculator.
For education only, not financial advice. Results depend heavily on the growth and return rates you choose, which no one can predict.