Rent vs Buy Calculator
EMI versus rent is the wrong comparison. It ignores stamp duty, the down payment's opportunity cost and rising rent. This is the full-picture version.
Verdict
Renting wins by $268.5K
- EMI
- $1,909
- Upfront cost
- $73.6K
- Owner's net worth (yr 20)
- $701.2K
- Renter's net worth (yr 20)
- $969.7K
The renter invests the down payment, stamp duty and every month's cost difference at 8%. The owner pays 0.5% of property value in yearly maintenance.
Net worth: owner vs renter
Year-by-year table
| Year | Owner net worth | Renter net worth |
|---|---|---|
| 1 | $83,254 | $95,066 |
| 2 | $103,452 | $118,017 |
| 3 | $124,644 | $142,565 |
| 4 | $146,882 | $168,833 |
| 5 | $170,221 | $196,950 |
| 6 | $194,719 | $227,058 |
| 7 | $220,437 | $259,310 |
| 8 | $247,441 | $293,870 |
| 9 | $275,800 | $330,914 |
| 10 | $305,585 | $370,636 |
| 11 | $336,873 | $413,240 |
| 12 | $369,746 | $458,949 |
| 13 | $404,289 | $508,005 |
| 14 | $440,592 | $560,666 |
| 15 | $478,752 | $617,212 |
| 16 | $518,870 | $677,945 |
| 17 | $561,053 | $743,193 |
| 18 | $605,414 | $813,305 |
| 19 | $652,074 | $888,663 |
| 20 | $701,159 | $969,677 |
A cash-flow race, not a slogan
Rent versus buy is the most emotionally loaded money question, and both camps argue with slogans. The math is a cash-flow race: the owner pays a large upfront cost and a high EMI but builds equity in an appreciating asset; the renter pays less each month and invests every rupee of the difference, including the down payment they never spent.
The verdict is decided by four numbers: rental yield (rent divided by price), loan rate, property appreciation and investment return. This tool simulates all four month by month, with rent rising annually and maintenance charged to the owner. Whichever side spends less in a given month invests the gap, so the comparison stays fair in both directions, including after the loan is paid off.
FAQ
What does this calculator include that simple ones miss?
Three things that decide the answer: stamp duty and registration (5 to 7% in most states, gone forever), the opportunity cost of the down payment (the renter invests it instead), and rent inflation (rent starts small but compounds). Simple EMI-versus-rent comparisons ignore all three.
Why does renting often win on paper in metros?
Indian metro rental yields are unusually low, typically 2.5 to 3.5% of property value per year, while home loans cost around 8.5%. You pay far more to own than to rent the same flat, and if the difference is invested at equity returns, the renter's portfolio compounds fast. Buying wins when property appreciation is strong or you stay very long.
What appreciation rate is realistic for property?
Long-run residential averages in most Indian cities are 6 to 8% annually, with huge variation by micro-market and decade, which is why 6.5% is the default. Test your assumption both ways: if the answer flips between 5% and 8%, the decision is genuinely close and non-financial factors should decide.
What does the calculator not model?
Old-regime tax deductions on home loan interest, capital gains tax on either asset, society transfer charges, and the non-financial value of owning (stability, no landlord) or renting (mobility). Treat close results as a lifestyle choice, not a math problem.
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