Rent versus buy cash-flow calculator

How this estimate works

Buyer wealth = sale value less selling costs and outstanding debt. Renter wealth = invested initial cash difference and monthly cash-flow differences, plus refundable deposit.

Compare homes that serve a similar need, then choose how long you expect to stay. Enter purchase price and rent independently, rather than deriving rent from an assumed yield. Purchase costs, sale expenses and annual ownership costs are explicit. Appreciation and investment returns are personal scenarios, not measured forecasts. Include a flat or falling price case if that would change your decision.

The buyer starts by spending the down payment and purchase costs. The renter invests that initial cash difference after setting aside the refundable rental deposit. Each month the renter adds the buyer’s mortgage payment and running costs less rent to the investment balance. A negative contribution means the rental scenario needs extra cash. The investment return compounds monthly at a rate equivalent to your entered annual return.

At each year end, the model compares the buyer’s sale proceeds after selling costs and outstanding loan with the renter’s investment balance and returned deposit. This captures the opportunity cost of the deposit because that money earns no return while it remains with the landlord. Rent and ownership costs increase annually at the separate rates you enter. Mortgage payments stop after the loan has been repaid.

The table shows each appreciation case independently. A break-even year means the first modelled year when buyer equity reaches renter wealth, not a permanent advantage or a recommendation. Later years can move in either direction. The estimate excludes income tax, transaction-specific deductions, moving disruption and non-financial preferences. If a scenario needs withdrawals from savings, make sure those withdrawals are feasible before comparing the final balances.

Try changing the holding period as well as appreciation. Buying costs are paid at the beginning, while selling costs apply when you leave; their effect can therefore be especially visible over a shorter stay. Rental flexibility, the ability to alter your own home and the risk of having to move are personal considerations which the wealth comparison cannot price for you.

Sources and limits

• Reducing-balance EMI formula, monthly interest and constant-rate repayment assumptions. Kotak Mahindra Bank, checked 2026-11-12. Effective basis: not stated by publisher.

Questions about this tool

This is general information, not legal, tax or financial advice. Check with a qualified professional for your case.

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