Interactive explainer
Rent vs buy breakeven calculator
Enter your weekly rent, the property price, your deposit and the interest rate. The calculator shows the indicative number of years it takes for buying to break even against renting the same home and investing the difference, with the assumptions shown.
Estimate your rent vs buy breakeven
Indicative only. It compares total cost of owning against renting and investing the deposit plus the yearly cost gap. Run your own numbers.
Indicative breakeven
The calculator adds up the unrecoverable costs of owning (mortgage interest, stamp duty, lenders mortgage insurance, council rates, strata and maintenance) against renting the same home and investing the deposit plus any yearly saving. The breakeven year is where the buyer's net position (equity plus growth, minus costs) first overtakes the renter-investor's.
Assumptions: stamp duty + buying costs ~5% of price; LMI applies when the deposit is under 20% of price (~2% of the loan); rates + strata + maintenance ~2.2% of price a year; property growth 4% a year; invested savings earn 6% a year. Indicative 2026 figures. Sources: state revenue offices, APRA and RBA data, industry estimates. Your result will differ; get tailored advice.
| Cost | Side | Indicative size | Why it counts |
|---|---|---|---|
| Mortgage interest | Buying | Most of early repayments | On an 80% loan the first years are largely interest, not principal: gone, like rent. |
| Stamp duty | Buying | ~3 to 5% of price | A one-off transfer tax in most states; unrecoverable, and large on a capital-city price. |
| Lenders mortgage insurance | Buying | ~1 to 4% of loan | Charged when the deposit is under 20%; protects the lender, not you. |
| Council rates + strata | Buying | ~$1,500 to $8,000 a year | Rates everywhere; strata levies on units can run into thousands a year. |
| Maintenance | Buying | ~1% of value a year | Repairs and upkeep an owner wears that a renter does not. |
| Opportunity cost of deposit | Buying | Whatever it could earn | A six-figure deposit and costs locked in bricks cannot also be invested. |
| Rent | Renting | Weekly rent | Buys shelter and flexibility, no maintenance, no entry or exit costs; builds no equity. |
The short answer
What the rent or buy question really asks
Almost every conversation about whether to rent or buy in Australia starts from the same line: rent money is dead money. It is the idea that every dollar of rent vanishes while every dollar towards a mortgage builds wealth, and it pushes a lot of people to buy sooner, and pay more, than the numbers justify. The honest comparison is not rent against a mortgage repayment, because a mortgage repayment is not all "saving". A large slice of it is interest, which is just as gone as rent, and around it sit stamp duty, lenders mortgage insurance, council rates, strata levies, maintenance and the quiet opportunity cost of tying up a six-figure deposit. The real question is total cost over the years you are actually likely to stay, against a breakeven horizon where buying finally overtakes renting and investing the difference. In high-priced capitals that horizon can run many years, which is why the right answer is about your time frame, not a moral verdict.
Here is the core takeaway in one line: "rent money is dead money" is a myth, because buying carries its own dead money in interest, stamp duty, rates and maintenance, so the honest decision is total cost over the years you will actually stay, measured against a breakeven horizon, not rent against a mortgage repayment. That reframes everything. The question is no longer moral, it is arithmetic and time. Buy and stay well past the breakeven year and ownership usually wins. Buy and move before it, and renting and investing the difference can leave you ahead.
Reframe the assumption: you are not choosing between wasting rent and building wealth. You are choosing between two streams of partly wasted money, with different upfront costs and different breakeven years. Pick the one that is cheaper over the time frame you can honestly commit to, not the one the slogan flatters.
The blind spot
Where "rent money is dead money" quietly misleads
Most "rent or buy" advice does one of three unhelpful things, and each one pushes people to buy sooner, and pay more, than the numbers justify.
First, it compares rent against the whole mortgage repayment, as if every dollar of the repayment built wealth. It does not. In the early years most of a repayment is interest, not principal, and interest is gone exactly like rent. Comparing rent to a full repayment stacks the deck before a single figure is checked.
Second, it ignores the one-off costs of buying. Stamp duty, lenders mortgage insurance, conveyancing and inspections can run to tens of thousands of dollars in a capital city, and none of it builds equity. Those costs have to be earned back through years of avoided rent and capital growth before buying is even level with renting, which is the whole point of a breakeven year.
Third, it forgets the opportunity cost of the deposit. A six-figure deposit locked in bricks is money that could have been invested. The "rent and invest the difference" path turns on exactly that, and a guide that treats the deposit as free wealth, rather than capital with an alternative use, is not giving you an honest comparison.
How the two sides actually stack up, piece by piece
Expert analysis: the real cost of owning versus renting
Interest, not the repayment, is the buyer's "rent"
On a typical 80% loan, the early years of repayments are mostly interest, with only a thin slice going to principal. That interest is the buyer's true equivalent of rent: money paid for the use of capital that builds no equity. Only the principal portion is genuine saving, and it starts small and grows slowly. So the fair comparison is rent against the unrecoverable parts of owning, interest plus rates, strata and maintenance, not rent against the full repayment. Frame it that way and the gap between the two options is far narrower than the slogan suggests.
Upfront costs: stamp duty and LMI set the starting hole
Buying begins in deficit. Stamp duty, a one-off state transfer tax, commonly runs to several per cent of the price, which is tens of thousands of dollars on a capital-city home, and most states offer relief only to eligible first home buyers. If your deposit is under 20%, lenders mortgage insurance adds a further one-off premium that protects the lender, not you. Add conveyancing, building and pest inspections, and a buyer is often tens of thousands of dollars behind a renter on day one. That hole is exactly what the breakeven horizon has to fill.
Ongoing owner costs renters never see
Ownership brings a tail of costs that rent quietly absorbs. Council rates apply everywhere; strata levies on units and apartments can run into thousands of dollars a year for buildings with lifts, pools or significant common property. Then there is building insurance and maintenance, commonly budgeted at around 1% of the property value a year for repairs and upkeep a tenant simply reports to a landlord. None of these build equity, and they keep coming for as long as you own, which is why they belong on the buying side of any honest ledger.
Opportunity cost and the breakeven horizon
The last piece is the one most people miss: the opportunity cost of the deposit and buying costs. That capital, often six figures, could have been invested instead of locked in a single, undiversified asset. The "rent and invest the difference" strategy puts the deposit plus any yearly saving into a diversified portfolio, and whether it beats owning depends on property growth, investment returns and time. The breakeven horizon is the year buying finally overtakes that renter-investor. In high-priced Australian capitals it often sits somewhere from five to ten years out, and longer where prices are highest, which is why your likely time in the home is the decisive number.
What this looks like in real decisions
How the dead-money myth costs Australians
The mechanics above are not theory. They are exactly how households end up worse off than the slogan promised:
The buyer who sold before breakeven
A couple buy in an expensive capital to stop "wasting rent", then a job offer interstate forces a sale three years later. The stamp duty, lenders mortgage insurance and selling costs never had time to be recovered, and modest price growth did not cover them. They would have been better off renting and keeping the deposit invested.
The repayment that was mostly interest
A first home buyer assumes their whole repayment is "going into the house" and is shocked, years in, at how little principal has been paid down. Most of it was interest, the buyer's version of rent, and the equity they pictured building simply was not there yet.
The strata bill nobody priced in
An apartment owner budgets for the mortgage but not for special levies, and a major repair to the building lands a five-figure strata bill. As a renter the same person would have reported the issue and paid nothing, a cost the rent-versus-repayment comparison never showed.
The difference that was never invested
A renter plans to invest the deposit they did not spend, but the money quietly leaks into lifestyle instead. Without the forced discipline of a mortgage, the "invest the difference" half of the strategy never happens, and they end up with neither equity nor a portfolio.
The insider insight
The decision is about time, and about discipline
Here is the part the slogans never put plainly. Rent or buy is not a contest between a "smart" choice and a "wasteful" one; it is a bet on two things you actually control: how long you will stay, and whether you will really invest what you do not spend. The longer you hold a home past its breakeven year, the more ownership pulls ahead, because the heavy upfront costs are spread thinner and equity compounds. The shorter or less certain your horizon, the more renting wins, because you never recover the entry and exit costs. And the whole renter-investor case rests on a habit most people lack: a mortgage forces saving, while an investing plan only works if you stick to it.
The non-obvious truth: the best financial choice is not renting or buying in the abstract, it is matching the option to your real time frame and temperament. Confident you will stay many years and want the stability? Buy. Uncertain, mobile, or disciplined enough to genuinely invest the difference? Rent and invest. The expensive mistake is buying to escape a slogan, then moving before the breakeven year.
The practical consequence: do not let "dead money" rush the decision. Estimate the years you can honestly commit, run the breakeven on your own price, deposit and rent, and only buy if your horizon comfortably clears it.
Grounded in the analysis
What you should actually do
Specific moves that follow from how the costs really stack up, not generic advice.
Estimate your real time horizon first
Before any number, decide how many years you can honestly commit to one home given your job, family and lifestyle plans. That single figure decides more than the interest rate. If it is short or uncertain, lean towards renting; if it comfortably clears the breakeven, buying is on the table.
Run the breakeven on your own figures
Use the calculator above with your actual rent, price, deposit and rate, and total the unrecoverable costs on both sides. Compare total cost over your time frame, never rent against a full repayment, and treat the deposit as capital with an alternative use.
If you rent, actually invest the difference
The renter-investor case only works with discipline. Set up an automatic investment of the deposit you did not spend plus the yearly gap between rent and owning, so the saving happens without willpower, the way a mortgage would force it.
Whichever way you lean, plan the move itself: use our moving checklist, read up on renting, and if you are buying see buying a house.
Current figures, last updated 2026-06-16
Indicative Australian rent-versus-buy figures for 2026. Sources: state revenue offices (stamp duty), APRA and RBA data on lending and rates, and industry estimates. Figures vary widely by state, price, deposit and timing, so treat every one as a ballpark and run your own numbers.
The bottom line
Why your time frame, not the slogan, decides rent or buy
Renting is not throwing money away, and buying is not automatic wealth. Both carry dead money: rent on one side, interest, stamp duty, rates, strata and maintenance on the other, plus the opportunity cost of a deposit locked in bricks. The honest decision is total cost over the years you will genuinely stay, measured against a breakeven horizon that, in expensive Australian capitals, often runs many years out. So estimate your real time frame, run the breakeven on your own price, deposit and rent, and only buy if your horizon clears it. With capital-city prices high in 2026, the households that come out ahead are the ones who match the choice to their time frame and their discipline, not the ones who buy to silence a slogan.
Common questions
A Selectra expert answers your rent or buy questions
No, and the slogan hides as much as it reveals. Rent buys you shelter, flexibility and freedom from maintenance, entry costs and exit costs, with none of your money at risk in the property market. The honest comparison is not rent against a whole mortgage repayment, because a mortgage repayment is not pure saving. In the early years most of it is interest, which is gone exactly like rent, and around it sit stamp duty, lenders mortgage insurance, council rates, strata levies, maintenance and the opportunity cost of your deposit. Renting and investing the difference can leave you better off if you move before buying breaks even. The right framing is total cost over the time you actually stay.
It depends on the price, your deposit, the interest rate and how fast the property grows, but in expensive Australian capitals the breakeven is often somewhere in the range of five to ten years, and can be longer. The reason is the heavy one-off costs at the start: stamp duty, lenders mortgage insurance and buying costs can run to tens of thousands of dollars, and it takes years of avoided rent plus capital growth to claw that back versus renting and investing the same money. If you are confident you will stay well beyond that horizon, buying usually wins; if your plans are uncertain or short, renting often wins.
The headline price is only the start. Expect stamp duty (a one-off state transfer tax, often around 3 to 5% of the price), conveyancing and legal fees, building and pest inspections, and lenders mortgage insurance if your deposit is under 20%. Once you own, council rates apply everywhere, strata levies apply to units and can run into thousands a year, plus building insurance and ongoing maintenance, commonly budgeted at around 1% of the property value a year. On top of all that is mortgage interest, which dominates early repayments. None of these build equity, which is why they belong in any honest rent-versus-buy comparison.
It is what your deposit and upfront buying costs could have earned if you had invested them instead of locking them into a property. A capital-city deposit is often a six-figure sum; parked in bricks it cannot also sit in shares, a diversified fund or an offset arrangement earning a return. The "rent and invest the difference" strategy turns on exactly this: a renter who invests the deposit plus the gap between rent and the full cost of owning can build wealth in parallel. Whether the home or the invested portfolio wins depends on property growth, investment returns and, above all, how long you hold.
It can, but it relies on discipline and time. The strategy is to rent a home you could not justify buying, then genuinely invest the deposit you did not spend plus the difference between your rent and the all-in cost of owning the same place. The maths favours the renter-investor when buying costs are high, when you may move before the breakeven horizon, and when investment returns hold up. It fails when the "difference" quietly gets spent rather than invested, which is the common real-world outcome. A mortgage is a forced savings plan; an investing plan only works if you actually stick to it.
In the most expensive capitals the answer leans on your time frame more than anything else. High prices mean large stamp duty and deposits, so the breakeven horizon where buying overtakes renting tends to be longer, often well beyond five years. If you are confident you will stay put for many years, can absorb rate rises and value the stability and control of owning, buying can still make sense. If your job, family or lifestyle plans are uncertain, or you may move within a few years, renting and investing the difference is frequently the cheaper and lower-risk path. Run your own numbers on the price, deposit and rent you actually face.
