Rent vs Buy Calculator
Compare net worth from buying a home vs renting and investing the difference
| Year | Monthly rent | Home value | Loan left | Buyer's net worth | Renter's net worth |
|---|---|---|---|---|---|
| 1 | ā¹20,000 | ā¹84,00,000 | ā¹62,72,625 | ā¹21,27,375 | ā¹28,78,725 |
| 2 | ā¹21,000 | ā¹88,20,000 | ā¹61,33,992 | ā¹26,86,008 | ā¹36,62,151 |
| 3 | ā¹22,050 | ā¹92,61,000 | ā¹59,83,104 | ā¹32,77,896 | ā¹45,16,526 |
| 4 | ā¹23,153 | ā¹97,24,050 | ā¹58,18,880 | ā¹39,05,170 | ā¹54,48,724 |
| 5 | ā¹24,310 | ā¹1,02,10,253 | ā¹56,40,139 | ā¹45,70,113 | ā¹64,66,313 |
| 6 | ā¹25,526 | ā¹1,07,20,765 | ā¹54,45,600 | ā¹52,75,165 | ā¹75,77,623 |
| 7 | ā¹26,802 | ā¹1,12,56,803 | ā¹52,33,865 | ā¹60,22,938 | ā¹87,91,825 |
| 8 | ā¹28,142 | ā¹1,18,19,644 | ā¹50,03,415 | ā¹68,16,229 | ā¹1,01,19,021 |
| 9 | ā¹29,549 | ā¹1,24,10,626 | ā¹47,52,594 | ā¹76,58,031 | ā¹1,15,70,335 |
| 10 | ā¹31,027 | ā¹1,30,31,157 | ā¹44,79,604 | ā¹85,51,553 | ā¹1,31,58,020 |
Runs entirely in your browser. Nothing you type or upload is sent to us or stored.
Results are estimates, not financial advice. Rates, charges and rules change, so confirm with your bank, post office or a financial adviser before you decide. Terms of use
How to Use
- Enter the Property price, your Down payment % and the one-time stamp duty, registration and other buying costs for your state.
- Enter the Home loan interest rate and Loan tenure.
- Enter the Monthly rent for a similar home and how much rent goes up each year.
- Set your assumptions: how fast the property price grows, the return on money you invest, yearly maintenance, and the number of years to compare over.
- The result changes as you type. You'll see your net worth if you buy and if you rent, which comes out ahead and by how much, and a year-by-year chart and table. Change one assumption at a time to see what tips the balance.
Rent or buy: comparing like with like
"Rent is money down the drain" is only half the story. A buyer also pays money that never comes back: loan interest, stamp duty, maintenance and property tax. On top of that, a big down payment gets locked up when it could have been invested. This rent vs buy calculator asks a fair question: if both people spend the same amount every month, who has more wealth after a set number of years?
The model and its assumptions
- Day one: the buyer pays the down payment plus buying costs (stamp duty, registration and so on). The renter invests that same amount instead.
- Every month: the buyer pays the EMI plus maintenance, and the renter pays rent. Whoever spends less invests the difference. Early on that's usually the renter. Once the loan is paid off, it's usually the buyer.
- Investments grow at your chosen return, compounded monthly (rate Ć· 12), the same way our SIP calculator works.
- Rent goes up once a year by your chosen %. The home's value grows by your chosen % every year.
- Maintenance (society charges, repairs, property tax, insurance) is a yearly % of the home's current value.
- Net worth at the end: buyer = home value ā loan still owed + buyer's investments; renter = renter's investments.
- Not included: home loan tax deductions, brokerage, selling costs, capital gains tax on the house or the investments, the rent security deposit, and moving costs.
Gap > 0 ā renter invests it; gap < 0 ā buyer invests it
Buyer = home value ā loan left + buyer's investments
Renter = renter's investments
Worked example
Take an ā¹80 lakh flat with 20% down, 7% buying costs and an 8.5% loan for 20 years (EMI ā¹55,541). Compare it with renting a similar flat for ā¹20,000 a month. Rent and the property both rise 5% a year, investments earn 10%, maintenance is 0.5% a year, and we look at the position after 15 years. The buyer pays ā¹21.6 lakh up front, and the renter invests that amount.
| Scenario (15 years unless stated) | Buy | Rent & invest |
|---|---|---|
| Base case above | ā¹1.39 Cr | ā¹2.37 Cr |
| Property grows 7% a year | ā¹1.94 Cr | ā¹2.39 Cr |
| Rent is ā¹30,000 | ā¹1.39 Cr | ā¹1.82 Cr |
| Investments earn 8% | ā¹1.39 Cr | ā¹1.87 Cr |
| Growth 7%, investments 8%, rent ā¹25,000, over 25 years | ā¹4.77 Cr | ā¹3.78 Cr |
With these numbers, renting wins over 15 years. The main reason is that the rent (ā¹2.4 lakh a year) is only 3% of the price, while the loan costs 8.5%. Buying catches up if the property rises faster, rent is a bigger share of the price, investment returns are lower, or you stay longer.
What tips the balance
- Rental yield (yearly rent Ć· price). In many Indian cities rent is a small fraction of the price, which favours renting. Where rent is high compared with the price, buying looks better.
- How long you stay. Buying costs are paid once, so they hurt most over short periods. If you might move city in a few years, renting keeps you flexible.
- Discipline. The renter comes out ahead only if they really invest the difference every month. If that money would get spent, buying works as forced saving.
- Appreciation. Price growth varies a lot by city and locality, and it isn't guaranteed. Try a few values instead of trusting one.
Money isn't the only factor. Owning gives you security and the freedom to renovate. Renting gives you flexibility and no maintenance headaches. Use the numbers to see what your choice costs, not to make the choice for you.