Rent vs Buy Calculator

Compares the long-term cost of renting and investing the difference with buying a home, over the number of years you plan to stay.

Home priceDepositBond interest rate (% a year)Prime plus or minus what your bank offers you.Bond term (years)Once-off buying costs (transfer duty, transfer and bond registration fees)Ask a conveyancer or use a bank's transfer cost calculator; transfer duty only applies above a threshold set by SARS.Rates, taxes and levies each monthMaintenance each year (% of home value)Building insurance each monthRent for a similar home each monthRent increase each year (%)Property value growth each year (%)Return if you invest instead (% a year, after fees)Selling costs incl. agent commission (% of sale price)How many years you plan to stay

Buying ahead by about R161 809

After 10 years: buying leaves you about R941 085 (home after selling costs, less the bond, plus anything invested); renting and investing the difference leaves about R779 276. Bond repayment about R11 148 a month. Buying first comes out ahead in year 8.

If property grows 2% a year less, the difference becomes R-114 101. Results are very sensitive to growth and return. Renting is not wasting money if you save the difference.

An estimate for awareness, not financial advice. An FSCA-authorised financial planner can model your real position.

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What you will need

Home price (R)
Monthly rent for a similar home (R)
How many years you plan to stay (years)
Deposit (R)
Bond interest rate per year (%)
Bond term (years)
Rates, taxes and levies per month (R)
Maintenance per year, % of value (%)
Building insurance per month (R)
Once-off buying costs (from Bond Calculator) (R)
Selling costs incl. agent commission, % of sale price (%)
Property value growth per year (%)
Rent increase per year (%)
Return if you invest instead, per year after fees (%)

How it works

Month loop m = 1..years*12. BUY: loan = price - deposit; bond payment fixed = loan*r/(1-(1+r)^-n); owner_monthly = bond payment + rates_levies + insurance_monthly + value*maintenance_pct/100/12 (value grows monthly at property_growth). RENT: rent_m grows by rent_escalation each 12 months. Renter invests: at month 0 deposit + buying_costs; each month max(0, owner_monthly - rent_m). Owner invests max(0, rent_m - owner_monthly) each month. Both invested pots grow at investment_return/12. At the end: buy_wealth = value_end * (1 - selling_cost_pct/100) - bond_balance_end + owner_pot. rent_wealth = renter_pot. difference = buy_wealth - rent_wealth. Break-even year = first year where buy_wealth >= rent_wealth. Show that results are very sensitive to growth and return assumptions and show a 'what if property grows 2% less' line.

What you get

Estimated wealth if you buy
Estimated wealth if you rent and invest
Difference
Year buying starts to come out ahead

What it means

On these assumptions buying comes out ahead over your time frame, but only if you stay long enough and keep up maintenance.
On these assumptions renting and investing the difference comes out ahead; renting is not 'wasting money' if you save the difference.
Buying costs are high, so buying for a short stay often does not pay off.

Next step: Want help interpreting this? Talk to a money coach or an FSCA-authorised financial planner.

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