Calculate your Renting vs Buying
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Home loan comparison
Lender | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Variable | More details | ||||||||||||
loans.com.au – Variable Home Loan (LVR < 90%) | |||||||||||||
| Variable | More details | ||||||||||||
HSBC – Home Value Home Loan (Principal and Interest) (LVR < 80%) | |||||||||||||
| Variable | More details | ||||||||||||
Homeloans.com.au – Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%) | |||||||||||||
| Fixed | More details | ||||||||||||
Newcastle Permanent – Fixed Rate Home Loan (Principal and Interest) 1 Year | |||||||||||||
| Variable | More details | ||||||||||||
Beyond Bank – Purple Basic Variable Home Loan (New Customer) (LVR 60%-80%) | |||||||||||||
| Variable | More details | ||||||||||||
Athena – Straight Up Owner Occupied - Celebrate (LVR 50%-60%) (Principal and Interest) | |||||||||||||
| Fixed | More details | ||||||||||||
IMB Bank – Fixed Rate Home Loan (Principal and Interest) 1 Year (LVR ≤ 80%) | |||||||||||||
| Variable | More details | ||||||||||||
Liberty Financial – Liberty Low Rate Home Loan (LVR < 95%) | |||||||||||||
- Low rates for purchase and refinancing
- Simple online application process
- No fees, unlimited redraws, 0.10% offset
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 1, 2024. View disclaimer.
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Savings.com.au Pty Ltd ACN 161 358 363 | Australian Financial Services Licence and Australian Credit Licence 515843
Renting Vs Buying Calculator
This calculator provides you with an estimate of your financial position when renting a house as opposed to when buying a house. This calculator provides a general indication, and makes a number of assumptions which are set out below.
Assumptions:
The calculator does not take into account any tax considerations, including income tax payable on interest earned from a savings account. The calculator estimates the amount of lender's mortgage insurance and includes it within the loan amount. The calculator estimates the value of the property to be the property price entered by the user, in addition to annual capital growth of 2% per annum over the period of analysis. The calculator assumes that the annual property capital growth is 2%, however this can vary considerably.
Government fees
The calculator uses transfer fees and mortgage registration fees as government fees. The calculator does not take into account any grants and concessions that buyers may be entitled to. Stamp duty, transfer fees and mortgage registration fees are obtained from the relevant government websites as at May 2020.
Savings
The calculator assumes that all savings will be allocated to the house deposit and upfront costs of buying the property (Purchase Costs). The calculator therefore assumes that when buying a property, the starting balance for either a savings or an offset account will be null if the Purchase Costs exceed the current savings, or the difference between the Purchase Costs and the current savings.
The calculator applies monthly savings to the ongoing costs associated with owning the house. Any surplus is assumed to be put into a savings or offset account. The net monthly savings contributions entered by the user are assumed to stay the same throughout the life of the loan. Net offset deposits are assumed to commence immediately.
Repayments
The calculator assumes that:
- Repayments are made on a monthly basis at the end of each month;
- The interest rate charge is divided equally over 12 monthly payments; and
- Interest is charged to the loan account at the same frequency and on the same day as the repayments are made.
Only the initial repayment amount is calculated. The calculator assumes that this repayment amount will remain the same for the loan term. In practice, repayment amounts can change for a variety of reasons.
Interest
The calculator assumes that the rate entered by the user is the rate that will apply to the loan for the full loan term.
Estimated net worth
The total estimated net worth includes the cash savings and the home equity.
Renting vs. Buying: Things to Consider
Renting vs. Buying is one of the most common question homebuyers often asks themselves. While the answers very much depend on the individual's intent and financial status, there could be other factors that play a role.
Read along for some handy tips to consider when deciding whether to buy or rent a property:
Real Estate Market
Consider looking at the current prices on the real estate market in the areas where you would like to buy a house. If the current pricing trend is high, you might want to ask yourself: is it the best time to buy? Or would renting for a few more months be a good idea to help make sure you buy when the time is right?
Personal Readiness
It is important to ask yourself if you are really ready to purchase a home. Purchasing a home means you are able to pay an ongoing monthly mortgage repayment, have saved up enough down payment, have a good credit history and are ready for any other housing costs such as utilities, repairs and maintenance. If your answer to any of these questions is a 'no', then renting might be the best decision for you in the meantime.
Financial Readiness
Making yourself financially ready to purchase a property is essential before making an actual decision. That means, you already have a stable income coming from your employment or own business, and you are able to pay any expense relating to your property purchase.
Location of the House
It is very important to consider the location of the property you intend to purchase. A home could be a long-term commitment which is why you should take the time to consider exactly where you would like to buy. Find a good neighborhood that you and your family feel safe and comfortable in.
Renting vs. Buying: What is Cheaper?
Now that you've taken into consideration the important factors between renting and buying, its time to ask the biggest and probably the most important question - what is cheaper?
Read below as we drill down points to help you figure out which way could save you more money.
| Points | Renting a House | Buying a house (through mortgage) |
|---|---|---|
| Monthly Payments | Monthly rental fees are usually cheaper compared to mortgage repayments | Monthly mortgage repayments are usually more expensive compared to rental fees |
| Maintenance Expenses | Maintenance expenses are shouldered by the landlord | Home maintenance expenses are shouldered by the homeowners |
| Property Taxes | Property taxes are paid by the landlord | Property taxes are shouldered by the homeowner |
| Mortgage Insurance | Mortgage insurance is paid by the landlord | Mortgage insurance is shouldered by the homeowner |
| Homeowners Insurance | Homeowners insurance is paid by the landlord | Homeowners insurance is shouldered by the homeowner |
| Homeowners Association Dues | There are some cases that the renters are asked to pay for HOA dues | HOA dues are always shouldered by the homeowner |
| Up-front Costs | Usually has low up-front costs | Usually has high up-front costs |
While it may seem that renting is cheaper, that might not always be the case, especially in the long run. Owning a house may seem pricey at first but considering that you may build equity and increase the market value of your home gives you a great chance of adding to your personal wealth.
Need more info to help you on your decision? Read the pros and cons of renting vs. buying a property. To further inform yourself before finally making a choice.
If your just looking to rent right now, the handy video below has some tips which can help you along the way
Renting vs. Buying FAQs
Renting may be more profitable than buying considering the overall costs of owning a home. Monthly mortgage repayments, maintenance expenses and other associated costs of homeownership are relatively higher compared to renting.
No. Renting is not a waste of money. Others might say that rent money is dead money but that is not always the case. Comparing monthly fees and maintenance, renting has lower costs than of owning a house. As a renter, you are not responsible for paying costly expenses that come when owning a home.
While this depends on the different scenarios and different lifestyles of every individual, renting forever may be more expensive than owning a house.
Some of the top advantages of owning a home include:
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Opportunity to increase and build equity
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Interest paid on a mortgage can be deducted from tax
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You have a lot more flexibility to live where you want
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Owning a home could be a good investment
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of 6 March 2024.
^The addition of offset sub-account means your comparison rate will change.
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Savings.com.au
Savings.com.au Pty Ltd ACN 161 358 363 | Australian Financial Services Licence and Australian Credit Licence 515843