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Investment · FINANCIAL TOOLS

Rent vs Buy Calculator

Compare owning against renting with both sides complete, including the down payment invested rather than spent.

Understand the calculation

Calculation logic, formula, example and guardrails behind the estimate.

How it works

Two positions are tracked in parallel. The owner pays the down payment, the transaction costs, the instalments and the upkeep, and holds an asset that appreciates while the loan amortises. The renter pays rent that rises each year, and invests the down payment and transaction costs the owner committed, plus whatever the owner's monthly outgo exceeds the rent by.

That last part is what most comparisons omit. On a ₹1 crore property at 20% down with 8% purchase costs, the renter starts with ₹28,00,000 invested on day one. Over twenty years at 11% that alone becomes over ₹2 crore, and a comparison that ignores it is not a comparison.

More detail

Selling costs are charged at the end rather than spread through, because that is when they fall. They are why a short stay rarely favours buying — roughly 10% of the price goes on transaction costs, and a two-year hold has nothing to amortise it over.

Neither result is presented as the right answer. The two most influential inputs — appreciation and investment return — are both unknowable, and the scenario tables exist so you can see how far the conclusion moves when you change your mind about them.

To work out the cash you would actually need upfront, use the purchase cost calculator.

To see what price your income supports, see the affordability calculator.

To check what a property you already own has returned, try the property return calculator.

Formula

Owning net = Property value − Loan outstanding − Cash spent − Sale costs; Renting net = Portfolio − Rent paid

The portfolio starts at the down payment plus purchase costs and grows monthly, absorbing the difference between the owner's outgo and the rent. Where rent exceeds that outgo the difference is negative and the portfolio is drawn down — modelling it as zero would flatter renting.

Cash spent
Down payment, purchase costs, every instalment and every year of upkeep.
Portfolio
The renter's invested capital: the down payment and costs, plus monthly savings, compounded.
Rent paid
Cumulative rent, rising by the increase rate each year.
Worked example

A ₹1 crore property with 20% down at 8.5% over twenty years, against renting the same home for ₹30,000 a month rising 7% a year, with 8% purchase costs, 6% appreciation and 11% on invested money.

  1. 01Down payment₹20,00,000
  2. 02Purchase costs at 8%₹8,00,000
  3. 03Monthly instalment₹69,391
  4. 04Renter's starting portfolio₹28,00,000
  5. 05Property value after 20 years₹3,20,71,355
  6. 06Selling costs at 2%₹6,41,427

The owner's instalment is more than double the initial rent, so early on the renter is investing the difference as well as the ₹28 lakh head start — and is comfortably ahead. Rent rising at 7% eventually overtakes the fixed instalment, and the property compounds at 6% on a much larger base. Whether the crossing happens inside twenty years depends almost entirely on the appreciation and return figures you enter, which is the honest conclusion rather than a verdict.

Frequently asked questions

Common questions about the rent vs buy calculator and the assumptions behind it.

Disclaimer

This calculator is provided for general information and planning only. It is not investment, tax or legal advice, and it does not take your personal circumstances into account. Outputs are estimates based on the assumptions stated on this page, exclude taxes and charges unless said otherwise, and market-linked returns are not guaranteed — the value of investments can fall as well as rise. Lending terms, rates and eligibility are decided by the lender. For advice on your own situation, speak to a qualified professional, several of whom you can consult on Finvestalk.