“Why pay rent when an EMI builds an asset?” It sounds right, but it compares the wrong things. A buyer spends a large sum upfront and usually more each month than a tenant. A fair comparison asks what the tenant could do with that money.
Follow both households
Our tool runs two households side by side, month by month:
- The buyer pays the down payment, stamp duty and other purchase costs, then the EMI, maintenance and property tax.
- The renter pays rent and invests what the buyer spent at purchase. Each month, whoever pays less invests the difference.
At the end, the buyer owns the home (minus any loan left and the cost of selling) plus anything they invested. The renter has their investments plus the security deposit back.
An illustration
A ₹50 lakh home, 20% down, a 9% loan over 20 years, 7% stamp duty and registration, ₹50,000 of other costs, maintenance at 0.5% of the value a year and ₹6,000 property tax. Rent for a similar home is ₹15,000 a month, rising 5% a year. Homes grow 5% a year. The renter earns 8% a year after tax. These are made-up inputs to show the mechanics, not market data.
- In the first month the owner pays ₹38,572 (EMI ₹35,989, maintenance ₹2,083, tax ₹500) and the renter pays ₹15,000. The renter invests the ₹23,572 difference.
- After 15 years: buyer ₹84.53 lakh, renter ₹1.09 crore. Renting and investing is ahead by ₹24.50 lakh, about ₹10.22 lakh in today’s rupees.
| First month | Buyer | Renter |
|---|---|---|
| EMI or rent | ₹35,989 | ₹15,000 |
| Maintenance and property tax | ₹2,583 | ₹0 |
| Paid in all | ₹38,572 | ₹15,000 |
| Invested | ₹0 | ₹23,572 |
- Rent and invest the difference
- Buy
Years from buying
See the numbers
| Years from buying | Rent and invest the difference | Buy |
|---|---|---|
| Year 1 | ₹18.02 lakh | ₹12.20 lakh |
| Year 2 | ₹22.29 lakh | ₹15.59 lakh |
| Year 3 | ₹26.81 lakh | ₹19.19 lakh |
| Year 4 | ₹31.62 lakh | ₹23.00 lakh |
| Year 5 | ₹36.72 lakh | ₹27.05 lakh |
| Year 6 | ₹42.14 lakh | ₹31.35 lakh |
| Year 7 | ₹47.89 lakh | ₹35.92 lakh |
| Year 8 | ₹54.00 lakh | ₹40.77 lakh |
| Year 9 | ₹60.50 lakh | ₹45.93 lakh |
| Year 10 | ₹67.40 lakh | ₹51.41 lakh |
| Year 11 | ₹74.74 lakh | ₹57.23 lakh |
| Year 12 | ₹82.53 lakh | ₹63.43 lakh |
| Year 13 | ₹90.83 lakh | ₹70.03 lakh |
| Year 14 | ₹99.65 lakh | ₹77.05 lakh |
| Year 15 | ₹1.09 crore | ₹84.53 lakh |
The buyer's home after selling costs and any loan left, plus investments; the renter's investments and deposit.
What flips it
The same tool shows where the answer changes, one input at a time:
- If homes grew faster than about 6.58% a year, buying would win.
- If the renter’s return were below about 5.64% a year, buying would win.
- If the loan rate were below about 6.32%, buying would win.
| If this changes | In the illustration | Buying wins |
|---|---|---|
| Home price growth a year | 5% | Above 6.58% |
| Your return after tax | 8% | Below 5.64% |
| Home-loan rate | 9% | Below 6.32% |
One input changed at a time; the rest as in the illustration.
Try it
The two numbers nobody knows
- Renting ahead after 15 years
- ₹24.50 lakh
- In today's rupees
- ₹10.22 lakh
- Buy₹84.53 lakh
- Rent and invest the difference₹1.09 crore
₹50 lakh home, 20% down, 9% loan over 20 years, and the other costs in the illustration above.
So the result rests on two numbers you cannot know for sure: how fast home prices grow, and what you really earn on money you invest. Be honest about the second one. Renting only wins if the difference actually gets invested, every month, for years.
What the maths leaves out
Security of tenure, freedom to move for work, your savings tied up in one asset, landlord trouble and possession delays are all real and not in the numbers. The tool lists them so you can weigh them yourself. Home-loan tax benefits are not modelled yet either, which makes buying look slightly worse than it may be for some people.
Put in your own home price, rent and return to see your answer.
For education only. Not investment, tax or insurance advice. Examples use the figures stated in the guide; check your own before you act.