FinCal

Rent or buy?

Net worth of buying versus renting and investing the difference, year by year – with break-even point.

CSV

€272,747 richer with renting

After 30 years, renting leaves you €272,747 richer.

Both households spend the same each month: €2,401 for the owner at the start, €1,400 rent – whoever pays less invests the difference. The price is 26.8 times the yearly Base rent / rent incl. utilities German: Kaltmiete / Warmmiete Kaltmiete is the rent for the flat alone. On top come the Nebenkosten (utilities such as heating, water, waste, building insurance); rent including them is the Warmmiete. Listings usually show the Kaltmiete. All terms in the glossary ; above about 25 renting tends to win.

Buying
€
Federal state German: Bundesland Germany's 16 states. Each sets its own real estate transfer tax, which is why the state of the property matters for the purchase costs. All terms in the glossary
Own capital (down payment) German: Eigenkapital Savings you put into the purchase yourself. Banks expect it to cover at least the incidental costs; with 20% or more of the price on top you get noticeably better interest rates. All terms in the glossary
€
Nominal interest rate German: Sollzins The yearly interest rate on the loan, without fees. The bank charges one twelfth of it each month on the remaining debt. To compare offers, look at the effective rate instead. All terms in the glossary
%
Initial repayment rate German: Anfängliche Tilgung The share of the loan you repay in the first year, in percent. Together with the interest rate it sets the monthly payment: (interest + repayment) × loan ÷ 12. Because interest falls over time, the repayment grows each year. 2–3% is common; below 1.5% the loan takes very long to pay off. All terms in the glossary
%
Fixed-rate period German: Zinsbindung How long the interest rate is guaranteed, typically 5–20 years. After it ends, you have to refinance the remaining debt at whatever rates apply then. By law you can cancel any loan 10 years after payout with six months' notice, without a penalty. All terms in the glossary
years
Follow-up financing German: Anschlussfinanzierung The new loan (or new rate with the same bank) for the remaining debt once the fixed-rate period ends. Nobody knows future rates, so plan with a pessimistic value. A forward loan (Forward-Darlehen) can lock in a rate up to about five years in advance, for a surcharge. All terms in the glossary
%
Owning costs
Maintenance reserve German: Instandhaltungsrücklage Money set aside for repairs such as a new roof or heating. For a house you save it yourself; for an apartment part of it is included in the Hausgeld. Common rules of thumb are 1–1.5% of the building's value per year, or €10–15 per m² – more for older buildings. All terms in the glossary
%
Other owner costs per month Running costs owners carry that are not part of a tenant's utility bill: the non-recoverable part of the service charge (Hausgeld) such as management fees, and repairs outside the reserve. Heating, water and property tax (Grundsteuer) are paid by owners and tenants alike, so leave them out.
€
Home value growth How much the home's value rises each year. Over the long run German property prices have grown roughly with inflation, about 1–3% a year, with large differences between cities and rural areas.
%
Renting
Base rent / rent incl. utilities German: Kaltmiete / Warmmiete Kaltmiete is the rent for the flat alone. On top come the Nebenkosten (utilities such as heating, water, waste, building insurance); rent including them is the Warmmiete. Listings usually show the Kaltmiete. All terms in the glossary
€
Rent increase How fast the rent rises. Rent control limits increases for existing tenants in many cities, but 2–3% a year is a common long-run assumption.
%
Return on investments The yearly return the renter gets by investing instead of buying. A broad global stock ETF has returned about 5–7% a year over long periods, with big swings along the way; a savings account pays much less.
%
Assumptions
Compare over How long you expect to stay. Buying needs time to earn back the incidental costs, so short periods usually favour renting.
years
Cost increases How fast repair and running costs rise – usually about the rate of inflation.
%
Selling costs To compare fairly, the buyer's home is valued as if sold at the end, minus these costs. Set it to 0 if you would keep the home.
%
Extra tenant costs per month Usually 0: tenants and owners both pay heating, water and similar utilities (Nebenkosten). Enter an amount only if renting brings costs the owner would not have.
€
Notary German: Notar In Germany every property purchase must be signed in front of a notary, who drafts the contract and handles the registration. Fees are set by law (GNotKG), roughly 1–1.5% of the price. All terms in the glossary
%
Land registry German: Grundbuch The official register of who owns a property and which loans are secured on it (Grundschuld). Entering you as owner and registering the bank's security costs about 0.5% of the price. All terms in the glossary
%
Broker's commission German: Maklerprovision The fee for the estate agent. For houses and apartments the buyer pays at most half of it; a common share is 3.57% of the price including VAT. There is none if you buy directly from the owner. All terms in the glossary
%
Flat tax on capital income German: Abgeltungsteuer Both households' investments are taxed as if sold at the end of the period. The saver's allowance and the yearly advance tax are left out – small effects over decades. Selling a home you lived in is tax-free in Germany. A flat 25% tax on interest, dividends and investment gains, plus the solidarity surcharge and possibly church tax – 26.375% in total without church tax. German banks deduct it automatically. All terms in the glossary
Partial tax exemption for funds German: Teilfreistellung Part of the gains from investment funds is tax-free, because the fund already pays some tax itself: 30% for equity funds (e.g. most stock ETFs) and 15% for mixed funds. Bond and money-market funds get none. All terms in the glossary

Results update as you type.

Buyer's net worth Buyer's net worth At the end: what the home would sell for, minus the remaining debt and selling costs, plus anything the buyer invested.
€796,986
Renter's net worth Renter's net worth At the end: the renter's investments after tax. The renter invests the own capital the buyer put into the home, plus each month's difference whenever renting is cheaper.
€1,069,733
Advantage of buying Advantage of buying Buyer's minus renter's net worth. Positive means buying comes out ahead; negative means renting and investing does.
-€272,747
Break-even Break-even The year from which the buyer is richer than the renter and stays ahead. Buying starts behind because of the incidental costs. "–" means renting is ahead at the end.
–
Price-to-rent ratio Price-to-rent ratio Purchase price divided by a year's base rent. Below about 20 buying tends to pay off, above about 25 renting usually wins.
26.8×

Net worth over time Net worth over time Each line shows what that household would own if everything were sold that year. Where the lines cross is the break-even point.

Home value minus debt and selling costs, plus investments after tax

Monthly housing cost Monthly housing cost The owner's loan payment stays the same during the fixed-rate period and stops once the loan is repaid, while rent keeps rising. Owner costs grow with inflation.

Loan payment plus owner costs vs. rent

The buyer's wealth The buyer's wealth The gap between the home's value and the remaining debt is the buyer's equity. It grows as you repay and as the home gains value.

What the home is worth to you, less what you owe

Year by year

Year Home value Debt Owner pays Renter pays Buyer's net worth Renter's net worth
1 €459,000 €393,890 €2,401 €1,400 €51,340 €117,223
2 €468,180 €385,415 €2,412 €1,435 €68,719 €135,045
3 €477,544 €376,631 €2,423 €1,471 €86,587 €153,497
4 €487,094 €367,524 €2,433 €1,508 €104,957 €172,611
5 €496,836 €358,085 €2,445 €1,545 €123,846 €192,422
6 €506,773 €348,300 €2,456 €1,584 €143,270 €212,965
7 €516,909 €338,157 €2,468 €1,624 €163,244 €234,281
8 €527,247 €327,643 €2,479 €1,664 €183,787 €256,410
9 €537,792 €316,744 €2,491 €1,706 €204,914 €279,393
10 €548,547 €305,446 €2,504 €1,748 €226,646 €303,278
11 €559,518 €293,734 €2,516 €1,792 €248,999 €328,112
12 €570,709 €281,594 €2,529 €1,837 €271,994 €353,945
13 €582,123 €269,009 €2,542 €1,883 €295,650 €380,832
14 €593,765 €255,964 €2,555 €1,930 €319,988 €408,828
15 €605,641 €242,442 €2,569 €1,978 €345,030 €437,994
16 €617,754 €230,594 €2,583 €2,028 €368,627 €468,393
17 €630,109 €218,201 €2,597 €2,078 €393,004 €500,092
18 €642,711 €205,239 €2,611 €2,130 €418,190 €533,162
19 €655,565 €191,682 €2,626 €2,184 €444,216 €567,677
20 €668,676 €177,502 €2,641 €2,238 €471,114 €603,716
21 €682,050 €162,671 €2,656 €2,294 €498,918 €641,364
22 €695,691 €147,158 €2,672 €2,351 €527,662 €680,708
23 €709,605 €130,933 €2,688 €2,410 €557,384 €721,842
24 €723,797 €113,962 €2,704 €2,470 €588,121 €764,866
25 €738,273 €96,211 €2,721 €2,532 €619,913 €809,883
26 €753,038 €77,645 €2,738 €2,596 €652,802 €857,004
27 €768,099 €58,227 €2,755 €2,660 €686,829 €906,346
28 €783,461 €37,916 €2,772 €2,727 €722,041 €958,034
29 €799,130 €16,672 €2,790 €2,795 €758,543 €1,012,257
30 €815,113 €0 €932 €2,865 €796,986 €1,069,733