To rent or buy, how do the costs compare?

You may be at that point in your life when you’ve started to think seriously about buying a home. Maybe you’ve rented for a number of years now and you’re tired of handing over your hard earned dollars to someone else. That said, the thought of having to take out a home loan can also be quite daunting.
We’ve taken a look at the cost of renting and buying, to help you weigh up the pros and cons of both.
Paying rent
As of January 2021, the average price to rent a house in Australia was $487 per week, that’s according to SQM Research. Now, if you’ve been a renter for a while, you’ll know that there are a few ways landlords or real estate agents can work out your monthly rent. One way is to divide the weekly rent by 7, then times it by 365 and divide again by 12.
By that calculation the average price to rent a house in Australia would be:
- around $2,116.12 per month
- and approximately $25,393.44 per year.
Of course that figure may vary dramatically depending on where you live. For instance, in Adelaide the average weekly asking rent for a house is $424, whereas in Canberra it’s $658.
Other costs
Other costs associated with renting include:
- paying a bond
- paying for contents insurance, if you want to protect your belongings
Costs that do not usually come with renting are:
- home building insurance,
- the cost to make repairs to your home
- and water rates (that is unless your water supply is metered, then you may have to pay for this yourself)
Restrictions
Of course one of the cons of being a renter is that you can’t make any changes to your home. This includes painting the walls, doing renovations or possibly even adding picture hooks. In most cases you won’t be able to have a pet either, unless the owner allows you to.
Paying back a home loan
In comparison, SQM Research shows that the average house price in Australia is currently around $633,998. So, assuming you have a 20% deposit saved, you would need to borrow approximately $507,198.
Now if you are buying the house to live in, then you would take out an owner occupier home loan. That is as opposed to an investment loan, which would apply if you were investing in a property to lease. With an owner occupier loan you will generally be paying back the principal (the amount that you actually borrowed) and interest on top of that.
So in the example above, the average monthly repayments would be around $2,002 per month. That’s with:
- an average variable home loan interest rate of 3.28% (that’s according to information available in the Mozo database^)
- a $507,198 loan
- and a loan term of 25 years
In this scenario the average cost to buy a home is less than the average cost to rent a home in Australia. However, this is only an average, house prices vary dramatically across the country. For instance, in Sydney the average house price is currently $1,372,623, whereas in Hobart it’s $611,049. It is also worth remembering that interest rates can change and rent prices can go up and down.
You can use the Mozo home loan repayment calculator to work out an approximate of what your monthly bill might be.
Other costs
Depending on the loan you opt for, you may have to pay some other fees. These can range from one-off fees such as an establishment fee to ongoing fees such as a monthly service fee. If you have less than a 20% deposit, you will usually have to pay lenders mortgage insurance on your loan as well.
Besides the cost of the home loan, other costs include:
- a stamp duty transfer fee
- home building insurance
- water and homeowner rates
- paying for repairs

Weighing up the options
As you can see, unless you have the money to buy a property outright, there are ongoing costs involved in both renting and buying. Both of which involve making regular payments.
The difference is that when you buy, you are working towards paying off a loan. Plus, if you buy your own home you will be able to make the modifications you wish. Although on the flipside of that you will be responsible for repairs, homeowner rates and water rates.
There are pros and cons to both buying and renting. It really comes down to where you are at in your life. Whether you want the responsibility that comes with a loan or not. Or, whether you’re ready to have your own space and alter it to your heart’s content.
If you are looking to buy and you need a way to finance your future home, why not head to Mozo’s compare home loans page. Or, take a look at the loans on offer below for an idea of what interest rates are available right now.
^Average percentage calculated from information available in the Mozo database, correct as of 28 January 2021.
*Based on statistics from SQM Research, correct as of January 2021.
Compare home loans - last updated 2 December 2023
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2023
Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.74% p.a. variable5.65% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Home Variable Rate
Owner Occupier, Principal & Interest, Refinance Only
interest rate
comparison rate
Initial monthly repayment6.15% p.a. variable6.15% p.a.Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
CompareCompareHome Variable Rate
Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.15% p.a.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.15% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - up to $30,000
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Up Home Variable Rate
-
Offset Home Loan
Package, Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.39% p.a.Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
CompareCompareOffset Home Loan
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.39% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.39% p.a.
- Upfront fees
- $350
- Ongoing fees
- $248.00 yearly
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Offset Home Loan
-
Flex Home Loan
Owner Occupier, Principal & Interest, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.19% p.a. variable6.43% p.a.Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
CompareCompareFlex Home Loan
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
- interest rate
- 6.19% p.a. variable
- comparison rate
- 6.43% p.a.
- interest rate
- 6.19% p.a. variable
- comparison rate
- 6.43% p.a.
- Upfront fees
- $250
- Ongoing fees
- $250.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- -
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Flex Home Loan
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Mozo experts choice awards won:
- Packaged Home Loan - 2023
Variable Rate Home Loan Special Offer
Package, Owner Occupier, Principal & Interest, LVR<80%
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.51% p.a.Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
CompareCompareVariable Rate Home Loan Special Offer
Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.51% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.51% p.a.
- Upfront fees
- $0
- Ongoing fees
- $395.00 yearly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $0 package fee for the first year.
Read our Mozo Review to learn more about the Credit Union SA Variable Rate Home Loan Special Offer
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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