worldofcalcsRent vs Buy Calculator
Buying
Renting and investing
Should you rent or buy a home?
Buying a home builds equity, but it ties up a large down payment and adds stamp duty, interest and upkeep. Renting is cheaper month to month in most Indian cities, and the money you don't spend can be invested. This calculator compares your net worth after a chosen number of years in both cases.
How the comparison works
Both start with the same cash. The buyer spends it on the down payment and buying costs (stamp duty, registration); the renter invests it. Each month the buyer pays the EMI plus upkeep and the renter pays rent. Whoever spends less that month invests the difference at the investment return. The home grows in value and the rent rises each year.
What tips the balance
- Rental yield matters most. Yearly rent is often only 2–4% of a flat's price in Indian cities, while a home loan costs 8–9%, so renting is usually cheaper month to month.
- Renting only wins if you actually invest the difference every month. If the money gets spent, buying works as forced saving.
- Stamp duty, registration and brokerage cost about 6–8% of the price, so buying rarely pays off if you might move within 5 years.
- Under the old tax regime, home loan interest (up to ₹2 lakh a year on a self-occupied home) and principal (in 80C) are deductible, which helps buyers. The new regime doesn't allow these.
- The calculator ignores non-financial reasons, such as the security of owning, freedom to renovate, or the flexibility to move for work. They can matter more than the numbers.
Worked example
- An ₹80 lakh flat with 20% down (₹16 lakh) and 7% buying costs (₹5.6 lakh); loan at 8.5% for 20 years, so the EMI is ₹55,541
- The same flat rents for ₹25,000 a month, rising 5% a year; investments earn 10% a year; the home gains 5% a year
- After 10 years the flat is worth ₹1,30,31,157 with ₹44,79,605 of loan left: the buyer's net worth is ₹84,21,241 after 1% selling costs
- The renter, who invested the ₹21.6 lakh and the monthly difference, has ₹1,14,59,852
- Renting comes out ₹30,38,611 ahead; if the rent were ₹40,000, buying would win by ₹5,91,302
Rent vs buy at different rents
Net worth after 10 years for an ₹80 lakh flat, with the other inputs as in the example.
| Monthly rent | Rental yield | Buyer's net worth | Renter's net worth | Better |
|---|---|---|---|---|
| ₹20,000 | 3% | ₹84,21,241 | ₹1,26,69,823 | Rent |
| ₹25,000 | 3.75% | ₹84,21,241 | ₹1,14,59,852 | Rent |
| ₹30,000 | 4.5% | ₹84,21,241 | ₹1,02,49,881 | Rent |
| ₹35,000 | 5.25% | ₹84,21,241 | ₹90,39,910 | Rent |
| ₹40,000 | 6% | ₹84,38,062 | ₹78,46,760 | Buy |
Higher rents, faster price growth or lower investment returns favour buying.