Are you sick of the uncertainty of renting, and dreaming of buying your own home? Use this handy rent vs buy calculator to work out the cost of both your home loan repayments if you buy a house and renting a home and paying off your landlord’s mortgage. With this rent vs mortgage calculator, you can find out how much home equity you could build up over the life of a 30-year home loan.
How to use our rent vs buy calculator
The rent or buy calculator compares the long-term financial results of buying your own home and renting a place to live to show you which will save more money.
Just enter the required details into the rent vs mortgage calculator, such as the amount you’ve saved up for a home loan deposit, the rent you’re currently paying, and the approximate cost of buying a house in your chosen area.
The calculator will tell you what your monthly repayments might be and how much equity you may have in your house at the end of the loan term. Change the interest percentage rate on your loan amount to see the difference that a lower interest rate will make to your repayments.
If you aren’t sure of exact numbers, just use your best judgement or enter an approximate figure so you’re able to get a rough idea of how your potential home equity increases over the years.
What are the benefits of buying a house?
There’s a range of benefits of purchasing a property which you can take advantage of, including:
- You’ll never be in a renter’s position of having to move if your landlord suddenly decides to sell the property
- You'll have the satisfaction of being able to decorate, renovate and change your home to your liking
- You’ll be able to make long-term plans for your children’s schooling in a particular area
- You'll build up equity in your home
- You may be able to use this equity in the future to buy an investment property or to assist your children in buying their own home
- You'll have a more financially secure retirement if you own your own home
What are the benefits of renting a house?
You’ll find that there’s also a variety of benefits when it comes to renting, which can include the following:
- Renting may initially cost less in repayments than paying a mortgage
- It provides you with the flexibility to move around at relatively short notice
- You may be able to move into a preferred area which enables your children to go to a particular school
- There's no home maintenance costs to budget for
- It's your landlord’s responsibility to deal with troublesome neighbours – or you can move away from them more easily
What are the costs of buying a house?
Stamp duty
This is a tax charged by state governments on the sale of property. It varies from state to state, but it can amount to tens of thousands of dollars. For example, if you buy a property worth $850,000 in Sydney, the stamp duty payable would be approximately $33,457.
The same property purchase in Adelaide would cost you around $40,580 in stamp duty.
Mortgage registration and transfer fees
There are also mortgage registration and title transfer fees to pay when buying a new home. Mortgage registration fees are usually less than $300 – for instance, you’ll pay around $155 in the ACT, $121.40 in VIC and $181.30 in WA. However, transfer fees are more expensive and can also amount to several hundred, if not thousands, of dollars.
For example, on a property worth $850,000 in SA, the transfer fee would be $7,463, and in QLD it would be $2,676.
Legal and conveyancing fees
You’ll have to employ a conveyancer to deal with the legalities of transferring the property into your name. Your conveyancer will deal with all aspects of this transfer, such as dealing with the official settlement between lenders and ensuring council and water rates and any emergency services levies are paid up to date.
You can expect to pay between $800 and $3,000 to your conveyancer.
Mortgage application fees
Some lenders charge a mortgage application fee (also known as a mortgage establishment fee) to establish a new loan, which can cost up to $700 to $800. Some lenders also charge ongoing loan administration fees, which may only amount to $10 to $15 each month but add up considerably over time.
However, many online lenders are now offering no-application-fee and no-ongoing-fee home loans for both first homebuyers and refinancers, making the cost of applying for a home loan far more affordable.
Building inspection and insurance
It’s important to get a building and pest inspection before buying your new home so you can have peace of mind that there are no major structural or termite problems with your property. Expect to pay around $300 to $500 for a building inspection and the same for a termite inspection. These costs may need to be paid before you buy your property, so make sure you’re aware of their cost so you can budget accurately.
Furniture removal fees
If you do decide to buy your own home, you’ll have to factor in the cost of moving your belongings from your rented residence to your new home. Naturally, removal costs will vary depending on how far you are moving and how much furniture and household goods you need to relocate.
For a smaller removal truck, expect to pay up to $1,000 for your move, and if you have plenty of furniture or are moving a long way, you may need to budget up to $4,500 for the cost of your move.
