Rent or buy? Cash, equity and the cost of moving

Rent or buy? Compare cash, equity and the cost of moving

By Tidy Cents · Published Oct 23, 2026 · 2 min read

Comparing rent with a mortgage payment is a useful start, but it does not answer what you will have left when you move. A fair comparison begins with the same starting capital, household income and decision date.

Separate cash from expense

A down payment reduces available cash and increases your interest in the home. The principal part of a mortgage payment reduces the loan balance. Neither should be counted again as a lost expense when calculating net wealth. A refundable rental deposit is also an asset, although it may not be available when you need cash.

Use the same household resources

Consider a simplified example with $30,000 of starting cash. Buying a $120,000 home with a $24,000 down payment and $1,000 of cash closing costs leaves $5,000. A $96,000 interest-free loan over 120 months requires $800 per month. With $2,000 income and $1,000 of other monthly spending, cash reaches $7,400 after twelve months.

Selling for $120,000, paying $6,000 of sale costs and repaying the remaining $86,400 loan leaves $27,600 from the sale. Combined exit wealth is $35,000. These are teaching assumptions, not a realistic offer or a forecast.

Include the rental deposit

Renting at $700 per month with a $1,400 refundable deposit leaves $28,600 initially. The same income and other spending add $300 per month. After twelve months, cash is $32,200. A fully returned deposit brings total exit wealth to $33,600.

In this deliberately simplified example, buying finishes $1,400 ahead. Interest, repairs, tax, investment returns or a different sale price could reverse that result.

Test the move date

A plan that looks attractive after ten years may be expensive if work requires a move after eighteen months. Add selling costs, lease-exit charges, temporary accommodation and the timing of deposit returns. A positive year-end balance does not remove a shortfall before the first salary.

Rent, Buy & Move Decision Lab keeps those assumptions and cash movements separate. Explore the fictional demo, then compare your own options using actual quotes.

Explore the fictional demo · See the full tool