Buying vs Renting
Buying
You build equity and lock in the housing cost, but take on interest, maintenance, taxes and transaction costs.
Renting
You keep flexibility and zero maintenance risk, but build no equity and face rent increases.
| Buying | Renting | |
|---|---|---|
| Monthly payment buys… | Part interest (lost), part principal (kept as equity) | Housing for the month (all lost, but all-inclusive) |
| Hidden costs | Maintenance (~1%/yr of value), property tax, insurance, closing costs | Rent increases, moving costs, deposits |
| Upfront cash needed | Down payment + closing costs (often 10–25% of price) | Deposit (1–3 months of rent) |
| Flexibility | Low — selling takes months and costs ~5–8% | High — leave at the end of a lease |
| Wealth effect | Forced saving via principal + possible appreciation | Free cash flow you must invest deliberately |
The bottom line
The honest comparison is: (mortgage interest + taxes + maintenance) vs rent — not the whole mortgage payment vs rent, because principal repayment is money you keep. Buying usually wins if you stay put 5+ years; renting wins for shorter horizons. Run your numbers below.