Rent or buy calculator
Is it better to buy a home or rent and invest the difference? Compare what you'd own after a number of years, with every assumption visible and yours to change.
After 10 years, buying leaves you ahead by
R 572 090
Buying: you'd own R 1 432 464 (the home's value after selling costs, less the bond still owed, plus anything you invested). Renting: you'd have R 860 374 invested.
- Buy R 1 432 464
- Rent and invest R 860 374
What each costs at the start
| Cash to buy (deposit, transfer and bond costs) | R 245 567 |
| Bond repayment | R 13 706 a month |
| Owner's costs (first month) | R 1 875 a month |
| Rent instead | R 12 000 a month |
The renter invests the cash the buyer would put down. Each month, whoever's housing costs less invests the difference, so both spend the same.
Year by year
| Year | Buy | Rent and invest |
|---|---|---|
| 1 | R 166 574 | R 312 904 |
| 2 | R 264 007 | R 378 506 |
| 3 | R 367 735 | R 441 740 |
| 5 | R 596 023 | R 558 114 |
| 10 | R 1 432 464 | R 860 374 |
How the comparison works
The buyer pays the deposit, transfer and bond costs, the bond repayment and the owner's costs. The renter pays rent and invests the cash the buyer put down. Each month, whoever pays less invests the difference, so the comparison is fair. At the end, the buyer sells the home (paying selling costs and settling the bond) and the renter cashes in their investments.
The result depends heavily on the assumptions, especially house price growth and investment returns. Try a few combinations before deciding.
What it leaves out
Tax on the renter's investment returns isn't included; a tax-free savings account avoids it for the first R 500 000. Capital gains on your own home are tax-free up to R 3 000 000 of gain. It also leaves out the things money can't measure: the security of owning, or the freedom to move when you rent.
Read the guide: Should you rent or buy a home?