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Buy it, or rent it and invest the rest?

Same money either way: buy the home, or rent the same home and invest the pot — paying rent from the returns while the capital compounds. Where do you stand the day the mortgage clears?

Set the four numbers below — or pick a starting point. Everything else is already sensible; fine-tune it under Advanced if you like.

Start from:

Home priceiThe home you'd buy — or rent instead.

DepositiThe share of the price you pay upfront. The rest is a mortgage.

Rent / monthiMonthly rent for the same home.

That's a 5.4% yield on the price.

Mortgage lengthiHow long the mortgage lasts. The whole comparison runs to the day it's paid off.

yrs

One smooth, average path. Switch to stress-test to see how it holds up when markets are bumpy.

You’d be about £70k better off renting & investing.After 25 years, renting and investing leaves you with roughly £837,551, versus £767,626 the other way. Both cost you the exact same each month — the renter just puts the difference into the market instead of into bricks.

The winner

RENT & INVEST

by £70k after 25 yrs

If you buy

£768k

mortgage-free home + savings

If you rent & invest

£838k

your invested pot, after tax

Rental yield

5.4%

yearly rent ÷ price

What you’re worth over 25 years

━ Buy━ Rent & invest

Hover the chart to read any year.

Advanced settings — fine-tune every assumption

Buying & the mortgage

Mortgage rateiThe interest rate on your mortgage.5.0%

Home price growth / yriHow much the home's value rises each year, on average.3.5%

Upkeep cost / yriYearly upkeep — repairs, insurance, service charge — as a share of the home's value.1.3%

Renting

Rent increase / yriHow fast the rent goes up each year.3.0%

Selling feesiEstate-agent and legal fees when the home is eventually sold.2.0%

Investing, cushion & tax

Investment return / yriAverage yearly return on money invested in the market. The S&P 500 has done roughly 10% long-term.10.0%

Cash cushioniSpare cash (in years of rent) the renter keeps aside, so a market crash doesn't force selling investments at a loss.2 yrs rent

Interest on the cushioniInterest earned on that spare cash.4.0%

Tax on investment gainsiTax on the profit when investments are sold. A home you live in is exempt — that's the key difference. Set 0% for an ISA or pension.24.0%

See the money, line by line

If you buy

The cash you need, and what leaves your account each month.

Home price£290,000

Deposit (25%)£72,500

Stamp duty£4,500

Legal & survey£1,450

Mortgage loan£217,500

Cash needed up front£78,450

Monthly mortgage£1,271

+ upkeep / mo£313

Total out / mo (yr 1)£1,584

If you rent & invest

Same cash invested, then the same monthly spend — rent paid, the rest invested.

Same pot, invested£78,450

Cash cushion (2 yrs rent)£31,200

Same spend / mo (yr 1)£1,584

− rent / mo£1,300

= invested / mo (yr 1)£284

Pot at the end (before tax)£1,070,713

− tax on the gain (24%)£233,162

Pot after tax£837,551

How this works — and where it’s honest

Same money, two roads. Both start with the identical cash: the deposit plus buying costs. The buyer spends it and mortgages the rest. The renter invests it — and invests the monthly difference between the two, too. That’s the only fair way to compare.

Same spend every month. The buyer’s outgoings are mortgage + upkeep. The renter spends the same total — pays the rent, invests the rest. The cash cushion is there only so a bad market year doesn’t force selling at the bottom.

The one big difference. A home you live in is free of capital-gains tax; the renter’s investments are taxed on their profit at the end. “Best estimate” uses steady average returns; “stress-test” draws hundreds of bumpy, realistic futures so a run of bad early years counts against you exactly as it would in real life.

Figures are UK-baseline (£, stamp-duty bands, private-residence relief) that you set yourself — no live market data. General guidance only, not financial, tax, or investment advice.

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