A true financial comparison of renting against buying over your chosen time horizon. Accounts for opportunity cost, equity build-up, appreciation, taxes, maintenance, and transaction costs.
This calculator runs two parallel simulations over your chosen time horizon. In the buying scenario, you purchase a property using a mortgage and accumulate equity through principal repayment and appreciation. In the renting scenario, you invest your down payment and any monthly cash flow savings into a portfolio that compounds at your assumed investment return.
Transaction costs are the most underestimated factor. In the Netherlands, transfer tax is 2% for first-time buyers and up to 10.4% for investors. Add notary fees and agent commissions and total entry and exit costs on a EUR 400,000 property can easily reach EUR 40,000 to 60,000. These costs must be recovered through appreciation before buying breaks even. On 3% annual appreciation, recovering EUR 40,000 on a EUR 400,000 property takes 3 to 4 years. During those years, renting and investing the down payment is often financially better. This is why the time horizon is critical.
Opportunity cost is the return you forgo by using your capital for one purpose instead of another. When you put EUR 80,000 into a down payment, that money can no longer be invested in financial assets. If a diversified equity portfolio earns 6% per year, after 10 years that EUR 80,000 would have grown to approximately EUR 143,000. That growth is the opportunity cost of using the money as a deposit instead. This does not mean buying is wrong — a mortgage is leveraged exposure to property, and appreciation on the full property value on only a partial deposit can produce strong returns. The calculator compares both sides honestly.
The investment return represents what a renter does with the money not tied up in a deposit. A conservative assumption for a globally diversified equity portfolio is 5 to 6% per year in real terms over long periods. A cautious investor in predominantly bonds or savings accounts might use 2 to 3%. Using a rate that reflects the risk profile of the alternative investment matters, because if the alternative is a savings account it is not fair to assume equity returns.