How this calculator works
- Step 1Day one₹21.6 lakhthe buyer pays the down payment, stamp duty and registration; the renter invests the same cash
- Step 2Every month₹34,541whoever spends less invests the difference (first-year figure shown)
- Step 3At the end15 yearscompare the buyer’s home and investments with the renter’s investments
The buyer pays an EMI plus maintenance and property tax each month. The renter pays rent. Both have the same money to spend, so the side that spends less in a month invests the difference at the same assumed return.
At each year end, the buyer’s net worth is the home’s value after selling costs, minus the loan still owed, plus any investments. The renter’s net worth is their investments. The first year in which buying stays ahead to the end is the break-even year.
The conventions behind the numbers
- Home loanA fixed annual rate divided by 12, charged monthly on the reducing balance, with equal EMIs at each month end.
- InvestmentsAn effective yearly return converted to an equivalent monthly rate, the same for both sides.
- Yearly stepsRent, maintenance, property tax and the home’s value change once a year by the rates you set.
- Costs as percentagesStamp duty and registration on the price, upkeep and tax on the current value, selling costs on the sale value.
What the comparison leaves out
- TaxIncome-tax deductions for home-loan interest or principal, tax on investment gains and capital gains tax on the sale are excluded.
- Rental costsSecurity deposits, brokerage on renting and moving costs are excluded.
- Changing ratesFloating loan rates, prepayments and varying investment returns are not modelled.
- Non-money factorsStability, flexibility, location and the time spent finding or maintaining a home are not counted.
Worked example
- EMI
EMI = L × j ÷ (1 − (1 + j)^−n)- Monthly gap
gap = EMI + ownership costs − rent- Buyer’s net worth
value × (1 − selling costs) − loan owed + investments
- Lloan amount ₹64,00,000
- jmonthly loan rate 0.71%
- nnumber of EMIs 240
- Cash on day one₹16,00,000 down + ₹5,60,000 stamp duty and registration₹21,60,000
- Buyer’s first-year monthly cost₹55,541 EMI + ₹4,000 upkeep and tax₹59,541
- Renter invests each month₹59,541 − ₹25,000 rent₹34,541
- Buying after 15 years₹1,66,31,425 × 98% − ₹27,07,119 + ₹0₹1,35,91,678
- Renting after 15 yearsinvestments, including the day-one cash₹1,60,87,508
- Ahead: rentingdifference in net worth₹24,95,829
The calculation keeps full precision; the figures above are rounded for display. Each year’s balances use closed-form formulas, and an independent month-by-month simulation reproduces them to the paisa.
Reading your result
On the default assumptions renting is ahead by ₹24.96 lakh after 15 years. Change one assumption and the answer can flip.
- Buying₹1.36 croreHome after selling costs, less the loan still owed, plus investments.
- Renting₹1.61 croreThe day-one cash and monthly differences, invested.
- Rent
- Down payment, costs and principal
- Loan interest
A break-even year marks when buying’s net worth catches up and stays ahead to the end. “No break-even” means renting stays ahead throughout, on these assumptions only.
The result depends heavily on the assumed investment return, home price growth and rent increase. Try a few values for each to see how sensitive the answer is.
Check each piece on its own
The comparison combines a loan, a home's value and an investment. Each can be tested in its own calculator.
The home loan eligibility calculator shows how much a lender may offer on your income, and the EMI calculator shows the payment. If you would let the home out, the rental yield calculator gives the return its rent earns.
The renter’s side invests the difference every month, which the SIP calculator models in more detail.
Common mistakes
Mistake: Comparing EMI with rent alone.
Instead: Include stamp duty, upkeep, property tax, selling costs and what the down payment could earn.
Mistake: Counting the whole EMI as a cost.
Instead: Remember that the principal part builds equity; net worth captures this.
Mistake: Using one optimistic growth rate.
Instead: Try lower and higher values for price growth and investment return.
Mistake: Assuming the renter will invest the difference without fail.
Instead: The comparison holds only if the money is actually invested.
This calculator does not tell you whether to rent or buy. Your situation, tax position and plans matter; a qualified adviser can help you weigh them.
Read how we test our calculators, or browse more money calculators.