Should you rent or buy a home?

Screenshot of rent vs buy calculator

I’m of Chinese descent so it’s been drummed into me that renting money is ‘dead’ money and you should buy bricks and mortar. If we take the investment side of the things out of it and you have a home to live in (and not live in your parent’s place forever), then you need to decide if you are renting or buying.

Renting a home has many benefits as does buying. What I wanted to find out though is from a financial standpoint what was better. Given strata levies can be quite expensive and upkeeping a house can be expensive, the rental option should work out OK – or so I thought before I created a Rent vs Buy calculator.

There are other calculators out there but none of them did exactly what I wanted – as I wanted to be able to edit the interest rate and the strata fees and I wanted to weigh up the differences for my personal situation which may not fit the model the other calculators had. So I had Jayen help me build it using React. We did it together as an exercise using Codepen.io as our scratchpad.

Screenshot of rent vs buy calculator

Over the years despite the Chinese upbringing and brainwashing to buy and not to rent I started seeing the other point of view and wondering if it was better to “just rent”. No strata fees, could change places every so often, problems are the landlord’s problem not mine etc and not tying up money that is locked into the home. The rent or buy calculator clears all that up.

It’s only in weird circumstances that renting is better financially! If you are only in town for a couple of years… or if the rent is super cheap and homes are expensive to buy… maybe then it’s better to rent. Or if you don’t have enough of a deposit to afford to buy… (we have another calculator for the amount of deposit you should have to make it worthwhile).

With the current climate of low interest rates and uncertainty you need to make up your own mind what works for you. But for the financial decision point of view, we have you covered with the Rent vs Buy calculator!

You can use the free calculator now at geared.net.au/rent-vs-buy – I hope you find it useful!

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