Growth Assumptions
Financially, renting and investing builds ₹89,33,792 more wealth over 20 years compared to the alternative.
For decades, the Indian middle-class dream has been synonymous with "owning a home". Parents advise it, society expects it, and banks market it. But in modern Indian metros like Mumbai, Bangalore, and Gurgaon, property prices have skyrocketed while rental yields remain low (2-3%). This has created a genuine financial dilemma: Is it actually smarter to rent?
This calculator isn't just about comparing monthly outflows. It simulates two parallel financial lives over 15+ years to see which path builds more wealth.
The mathematical models often show that Renting + Investing wins because equity returns (12%) usually beat real estate appreciation (6%) + rental yield (3%).
However, there is a catch: This only works if you actually invest the surplus difference between the potential EMI and your Rent.
"The biggest risk in renting is lifestyle inflation. If you rent but spend the surplus on vacations instead of SIPs, buying a home is vastly superior because it acts as 'forced savings'."
Buy IF:
Rent IF:
Common questions to help you make the right decision.
Rental yield is the annual rent divided by the property value. In most Indian metros (Mumbai, Bangalore, Delhi), residential rental yield is typically 2% to 3%. This is quite low compared to the loan interest rate of ~8.5%. This gap is why renting can often be financially smarter if you are disciplined with investments.
Yes, implicitly. When buying, your effective interest rate is lower due to tax benefits (Section 24b up to ₹2L, Section 80C up to ₹1.5L). You can adjust the "Loan Rate" input slightly lower (e.g., reduce by 0.5-1%) to simulate the post-tax effective rate. Similarly, for renting, the investment returns are subject to capital gains tax, so use a realistic post-tax return rate (e.g., 10-12% for equity mutual funds).
If you move cities every 2-4 years, renting is almost certainly better. Buying real estate has high entry and exit costs (Stamp Duty alone is ~5-7%, Brokerage is 1-2%). It typically takes 5-7 years just to recover these transaction costs through appreciation. Renting offers flexibility without these sunk costs.
Not necessarily. While it may not offer the highest returns compared to equities, it offers forced savings (via EMI principal), leverage (buying a large asset with small capital), and emotional security. For many, the peace of mind of owning a home outweighs the mathematical advantage of renting.
