Buy or rent — how to calculate what actually pays off

Flashback (Sweden’s largest online forum) has hundreds of threads about it. Financial journalists write about it every time housing prices move. “Always buy” says one camp. “Rent and invest the difference” says the other. Both are right in some situations and wrong in others.

The answer depends on three variables: how long you plan to stay, what the down payment (kontantinsats) could earn if you invest it instead, and what housing prices do during the period. The last one is uncertain. That is why no one can give you a definitive answer — only a framework for calculating your own situation.

New rules since 1 April

Since 1 April 2026, new mortgage rules are in effect. The mortgage ceiling (bolånetak) was raised from 85 to 90 percent, meaning the minimum down payment was lowered from 15 to 10 percent. The stricter amortisation requirement (an extra percentage point for households with debt exceeding 4.5 times annual income) was abolished. The base amortisation requirements linked to loan-to-value ratio (belåningsgrad) remain unchanged. This changes the assumptions in the calculation.

The cash flow, month by month

Erik buys a two-room apartment in a housing association (BRF — bostadsrättsförening) for SEK 3 million with a 10% down payment (SEK 300,000). Sara rents a comparable apartment for SEK 10,500.

Item	Buy	Rent
Net interest (after 30% tax deduction)	4,174	—
Amortisation	4,500	—
Housing association fee	4,000	—
Electricity + insurance	550	500
Rent	—	10,500
Total	13,224	11,000

Interest calculation: Loan SEK 2,700,000 x 2.65% average variable rate (April 2026) = SEK 71,550/year. Tax deduction (ränteavdrag) of 30% gives a net cost of SEK 50,085/year, or SEK 4,174/month. Amortisation at 2% (loan-to-value 90% = above 70%) gives SEK 54,000/year, or SEK 4,500/month.

Month by month, renting looks cheaper by SEK 2,224. But this comparison misses the most important point: Erik’s SEK 4,500 in amortisation reduces his debt, and every krona ends up in his own pocket at a future sale. Over ten years he amortises roughly SEK 540,000. That is not money that disappears. It is forced savings.

The leverage effect

Erik controls an asset worth SEK 3 million with SEK 300,000 in equity. That is leverage, and it works both ways.

If the property appreciates at 3 percent per year nominally — a conservative assumption below the historical average of 5–6 percent nominal — it is worth approximately SEK 4,031,000 after ten years. But if the property falls 10 percent, Erik has lost SEK 300,000 on paper — his entire equity. Sara loses nothing in a price drop. That is the price of sitting outside the market.

Ten years later — a comparable calculation

Sara invests her SEK 300,000 in an index fund in an ISK (investeringssparkonto — a Swedish tax-advantaged investment account) with 7% gross return. The ISK tax (a flat-rate tax based on the government borrowing rate + 1 percentage point, approximately 2.75% in 2026, taxed at 30%) gives an effective tax cost of just under 1% per year, so roughly 6% net return. She also saves the extra SEK 2,224 she has left each month.

With 6% net return and monthly compounding, this gives a total portfolio value after ten years of approximately SEK 870,000.

Erik, on the other hand, has:

Property value at 3% appreciation: SEK 4,031,000
Remaining loan (after SEK 540,000 amortisation): SEK 2,160,000
Total equity: SEK 1,871,000

Erik has total equity of SEK 1,871,000. Sara has a portfolio worth SEK 870,000. The difference: roughly one million in Erik’s favour, driven by the leverage on the property.

But: if housing prices stay flat for ten years, Erik’s equity drops to SEK 840,000 (300,000 down payment + 540,000 amortisation). Sara with her SEK 870,000 pulls ahead. If prices stagnate, Sara wins.

A rule of thumb that holds

Time horizon	What typically works better
Under 3 years	Rent — transaction costs eat up everything
3–5 years	Depends on the market
5–10 years	Buying often wins
Over 10 years	Buying favours wealth accumulation

Under three years it is almost always wrong to buy. Estate agent fees (at sale), potential move-out cleaning, and potential capital gains tax (reavinstskatt) mean you rarely come out ahead.

One thing that rarely comes up in the debate: rent increases. Within the regulated rent system (bruksvärdesystemet), Swedish rents have typically risen 2–3 percent per year. A rent of SEK 10,500 today becomes roughly SEK 12,700 after ten years at 2% annual increases, or SEK 14,100 at 3%.

Do not forget that operating costs (driftkostnader) can differ by thousands of SEK per month depending on property type and condition. The housing association fee typically includes heating and water, while rent normally does too. Always compare the actual total housing cost, not just individual items.

Calculate it yourself

Calculate your total housing cost and see how wealth builds through amortisation and potential value appreciation. Adjust price development, interest rate and time horizon in BoKalk and see what actually pays off in your situation.

Christoffer, founder BoKalk