# AMP

## Rent vs buy calculator

Print### Savings

### Rent

### Buy

### Costs

Year | Rent | Buy |
---|

The AMP Rent vs Buy calculator illustrates the potential benefit of either renting or buying a property over time. You can also change the key assumptions that affect the outcome to better illustrate your situation.

Total savings after :

Year | Rent | Buy |
---|

After :

value of savings (rent)

–

Value of equity (buy)

=

better off renting

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### Disclaimer

- This calculator is provided by Rice Warner (ABN 35 003 186 883) and published by AMP Life Limited (ABN 84 079 300 379) AFSL 233 671 (AMP Life).
- The results provided by this calculator are indicative only, actual amounts may be higher or lower. They are based on the accuracy of the data entered into the calculators and a change in factors may vary the result.
- No representation is made as to your capacity to borrow money or to repay any loan. To help you consider the impact of interest rate changes we suggest exploring the impact of a rise in interest rates.
- The results do not constitute an offer to lend you money. Your financial situation and the suitability of a loan can only be assessed after a lender has made reasonable enquiries to ascertain these matters. Please be aware that your lender may also charge additional fees and charges.
- The calculator and the results provided are generic and do not take into account your personal circumstances. The calculator is a guide only and is not intended to be relied upon for the purposes of making a decision in relation to a credit or financial product. The user should obtain professional advice before making any financial decision.
- Other than as required by consumer protection law, under no circumstances will AMP Life and its related bodies corporate be liable for any loss and/or damage caused by a user's reliance on information obtained by using this calculator.

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### Editable assumptions

#### General

#### Rent scenario: savings

#### Buy scenario: funding of purchase costs

#### Buy scenario: loan interest rate

#### Buy scenario: loan term

#### Buy scenario: loan repayments

#### Price inflation

#### Timing assumptions

#### Mortgage repayments

The default assumption of 4.00% p.a. is an estimate of prospective long term Australian fixed interest growth as sourced from the Rice Warner Survey of Investment Assumptions dated 31 December 2013. You may edit this assumption.

The default assumption of 5.00% p.a. is an estimate of prospective long term capital only property growth as sourced from the Rice Warner Survey of Investment Assumptions dated 31 December 2013. You may edit this assumption.

The default assumption of 4.00% p.a. is an estimate of prospective long term Australian fixed interest growth as sourced from the Rice Warner Survey of Investment Assumptions dated 31 December 2013. You may edit this assumption.

All results are shown in future dollars. Due to the effects of inflation, the purchasing power of a dollar is likely to be less in the future then it is currently.

The rent scenario assumes the amount you enter as savings per month/fortnight/week (as adjusted for inflation) will continue to be saved each month/fortnight/week throughout the period covered by the calculations.

The calculator buy scenario assumes that the total amount which has been saved will be applied towards the property purchase costs (including the purchase deposit and the associated upfront costs such as stamp duty and Lender's Mortgage Insurance fees). The remainder of the property purchase costs are covered by the loan amount.

The loan interest rate you enter into the calculator is assumed to be the annual nominal rate of interest, compounded per the mortgage repayment frequency. For example, for a loan interest of 6.00% p.a. and monthly repayments, the calculator assumes the interest rate charged is (6.00% / 12) = 0.5% per month, compounded monthly.

The loan interest rate you enter into the calculator is assumed to remain the applicable loan interest rate over the entire term of the loan.

The term of loan you enter is taken to be a whole number of years.

Where the periodic rent and savings amounts you enter (as adjusted for inflation) are less than the corresponding minimum mortgage repayments, the calculator's buy scenario assumes the minimum mortgage repayments for the same period will still be made (i.e. the borrower will reduce other expenditures to the extent necessary to permit the making of the minimum mortgage repayments).

Where the periodic rent and savings amounts you enter (as adjusted for inflation) exceed the corresponding minimum mortgage repayments, the calculator's buy scenario assumes the excess amount will also be applied to mortgage repayments with the result that the loan term will be reduced.

By default, price inflation is assumed to be 2.5% p.a. This assumption is set at the mid-point of the Reserve Bank of Australia's 2–3% p.a. target range for price inflation. The amount you save each period and the ongoing ownership costs are assumed to increase with price inflation each period.

The mortgage repayment frequency (in the case of the buy scenario) is assumed to be the same as the rental payment frequency (in the case of the rent scenario).

Mortgage repayments (in the case of the buy scenario) and rental payments (in the case of the rent scenario) are assumed to be made at the end of each month/fortnight/week (depending on the rental payment frequency you select).

Mortgage repayments (in the case of the buy scenario) are assumed to occur immediately after the accrued loan interest has been charged to the loan.

Rental increases (in the case of the rent scenario) and appreciation on the home (in the case of the buy scenario) are assumed to happen at the end of each month/fortnight/week (depending on the rental payment frequency you select).

One year is assumed to contain exactly 52 weeks, 26 fortnights, or 12 months. This implicitly assumes that a year has 364 days rather than the actual 365 or 366.

All months are assumed to be of equal length.

Concessions such as the First Home Owners Grant are not included in these calculations.

The weekly and fortnightly mortgage repayment amounts are assumed to be a quarter and a half of the monthly repayment amount respectively.

The mortgage repayment amount is calculated assuming a standard home loan where both interest and principal is repaid over the loan term.