Rent vs buy net-worth comparison.
Verdict
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Buy: net worth
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Rent + invest: net worth
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Your breakdown
Updates live as you type| At the 10-year mark | Buy | Rent + invest |
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The question is net worth, not monthly cash flow
Most rent-versus-buy arguments in India collapse into a single emotional line: rent is money down the drain. That framing is wrong, and it costs people money. The right question is which path leaves you richer at the end of your time horizon, after you account for everything. This calculator answers it the only honest way. On the buy side it tracks the home’s value as it appreciates and subtracts any loan still outstanding at the horizon. On the rent side it invests your down payment from day one, then every month it invests the difference between what the buyer pays as EMI and what you pay as rent. Whichever pile of net worth is bigger at the end wins. EMI alone tells you nothing, because the buyer is forcibly saving through principal repayment while the renter has to save deliberately.
Why Indian metros tilt the maths toward renting
India has a structural feature that surprises people who learned personal finance from American blogs: rental yields in our big cities are dismally low, often 2% to 3% of the property value a year. A flat worth ₹1 crore frequently rents for ₹25,000 to ₹35,000 a month. That means the renter’s monthly outflow is tiny relative to the asset price, freeing up a large gap to invest. Pair that with home loan rates near 8.5% and equity returns that have historically run 11% to 12%, and the opportunity cost of locking ₹20 lakh into a down payment becomes the deciding factor. Buying tends to win only when your horizon is long, property appreciation is strong, or you would not otherwise invest the saved cash with any discipline.
A ₹1 crore flat over a 10-year horizon
Run the defaults: a ₹1 crore property, ₹20 lakh down, a ₹80 lakh loan at 8.5% over 20 years, against ₹30,000 rent growing 6% a year, the down payment and savings invested at 11%, property appreciating 6%. The EMI works out to ₹69,426 a month. Compared over 10 years, here is where the two paths land.
The two outcomes sit within a percent of each other, which is the real lesson. At default metro assumptions the decision is close enough that lifestyle, job mobility, and your own savings discipline should break the tie, not a spreadsheet.
What the calculator deliberately leaves out
Keep three things in mind that the model simplifies. First, buying carries one-time costs the renter never pays: stamp duty and registration of 5% to 7% of the price in most states, plus brokerage and interiors, which in this example would be ₹6 to ₹8 lakh of dead capital on day one. Second, the buyer on a home loan can claim up to ₹2 lakh of interest under Section 24(b) and ₹1.5 lakh of principal under Section 80C, but only on the old tax regime, so if you are on the new regime that benefit vanishes. Third, the model assumes the renter actually invests the difference every month. In real life many people do not, and an undisciplined renter ends up poorer than a buyer who was forced to build equity through EMIs. If you know you will spend the gap rather than invest it, the calculator’s renting edge is illusory and buying is the safer wealth machine.
Below what horizon does renting almost always win?
As a rule of thumb in Indian metros, under about 7 years renting usually wins, because the high upfront transaction costs and the slow early principal repayment have not had time to pay back. The longer you stay put and the more the property appreciates, the more buying catches up and overtakes.
Does the tax benefit on a home loan change the answer?
It can shift it toward buying if you are on the old regime, where the combined Section 24(b) and 80C deductions cut your effective EMI cost. On the new regime there is no such relief on a self-occupied home loan, so do not factor it in. Adjust the loan rate downward by your tax saving if you want to model the old-regime case.