Rent vs buy calculator

Simple and easy rent vs buy calculator

*The results generated by the calculator are general and don't take into account factors other than what you input. As such, the results are general and not necessarily accurate. For specific information, seek professional advice.

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How to calculate rent vs buy amounts

Rent vs buy calculators assess renting versus buying by considering:

  • Initial Costs: Comparing down payments and closing costs (buying) with deposits and rental fees (renting).
  • Monthly Payments: Monthly rent versus mortgage payments, including taxes and insurance.
  • Maintenance & Utilities: Costs for upkeep and utilities for both options.
  • Property Value Changes: Estimating property appreciation or depreciation.
  • Tax Implications: Deductions available for homeowners.
  • Time Frame: Duration of stay in the property.
  • Opportunity Costs: Potential returns from investing the down payment elsewhere.
  • Selling Costs: Future costs associated with selling the property (for buyers).

The outcome shows which option may be more cost-effective over time and the break-even point for buying over renting.

FAQs

How much can I afford?

We assist our clients in determining an affordable mortgage range, based on a thorough assessment of their financial situation.

For a rough estimate, use our handy mortgage calculator.

What are the costs of owning a home?

We provide our clients with a detailed understanding of all costs associated with homeownership, including maintenance, insurance, and taxes.

To get in touch with us about your home loan, give us a call or fill out a contact form today.

Is buying a house a good investment?

This depends on your unique situation and the options available. Our team analyses the property market to advise on the potential investment returns of buying a home.

How does credit score affect buying?

Our team analyses the property market to advise on the potential investment returns of buying a home.

A credit score significantly impacts the home buying process, particularly in terms of mortgage eligibility and terms:

  1. Mortgage Approval: A higher credit score increases the likelihood of being approved for a mortgage. Lenders view a high score as an indicator of financial responsibility and lower risk.
  2. Interest Rates: Credit scores directly influence the interest rates offered on a mortgage. Higher scores typically secure lower interest rates, leading to significant savings over the life of the loan.
  3. Loan Terms: Better credit scores may also provide access to more favorable loan terms, such as a larger loan amount or a lower down payment requirement.
  4. Insurance Premiums: Some home insurance companies use credit scores to determine premiums, meaning a higher score could lead to lower insurance costs.

Improving your credit score before applying for a mortgage can result in more favourable loan conditions and overall cost savings.

What is the minimum down payment required in Australia?

In Australia, the minimum down payment required for a home varies, but some key points are:

  1. Standard Minimum Down Payment: Most lenders in Australia require a minimum down payment of 5% of the purchase price of the property. This amount is standard for many home loan products available to buyers​​.
  2. Lender's Mortgage Insurance (LMI): If you're applying for a home loan with a deposit smaller than 20% of the property's value, you'll generally need to pay Lender’s Mortgage Insurance. However, some lenders will allow a minimum deposit of 5% as long as LMI is paid. This insurance protects the lender, not the borrower, in case of default​​.
  3. No Deposit Loans: In certain cases, it's possible to apply for a home loan with no deposit if your loan application is supported by a guarantor. This is often an option for borrowers in specific professions or circumstances where a family member or another guarantor can provide security for the loan​​.
  4. Special Provisions for First-Time Buyers and Single Parents: For first-time buyers and eligible single parents, there are mortgage options that allow a deposit as low as 5% without the need for Lender’s Mortgage Insurance. For eligible single parents, this can be as low as 2%​​.

These options demonstrate the Australian housing market's flexibility in accommodating a range of financial situations, although they also highlight the importance of understanding the additional costs like LMI when not meeting the typical 20% down payment threshold.

What are the tax benefits of owning a home?

Tax benefits of homeownership include things such as deductions for mortgage interest and property taxes, which can offer significant savings.

How long do you need to stay in a home to make it worth buying?

This differs for every home. We calculate the break-even point for a home purchase, considering all costs, including the potential appreciation and the duration over which these costs are spread, to advise on the optimal duration for homeownership.

Should I get pre-approval for a mortgage?

We recommend mortgage pre-approval as it provides clarity on the budget, strengthens the buying position, and streamlines the purchasing process.

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