What is the Rent vs Buy Calculator?
Compare modeled housing cash outflows and ending net positions over the same time horizon. Property growth, investment returns and rent growth are assumptions, not forecasts. The calculator does not select a home, loan or investment product.
How does it work?
Both scenarios begin with the same cash: the down payment plus entered stamp duty, registration and purchase brokerage. The buyer spends it on the purchase; the renter invests that equivalent initial cash. Each month, the lower housing-cost scenario invests the difference so both use the same monthly budget. This applies to either scenario, including after the mortgage ends.
Loan interest uses the entered annual percentage divided by 12 and 100, with the existing reducing-balance EMI formula. Investment growth uses an effective annual assumption converted to a monthly factor: (1 + annual return / 100)^(1/12). Contributions occur at month-end. Rent changes once per year; maintenance and annual property tax remain constant.
Buy net position is estimated sale proceeds after selling costs, minus outstanding loan, plus invested housing-cost differences. Rent net position is the invested equivalent initial cash plus invested housing-cost differences. Housing cash outflow excludes investment contributions; those are shown separately. Net positions are future nominal rupees, not inflation-adjusted or after-tax amounts.
Worked example
For a Rs 12 lakh property with a 100% down payment, zero growth assumptions, no costs and Rs 10,000 monthly rent over one year: the renter invests the initial Rs 12 lakh and pays Rs 1.20 lakh rent. The buyer owns a Rs 12 lakh property and invests the Rs 10,000 monthly housing-cost difference, ending with Rs 13.20 lakh net position. This is arithmetic under deliberately simplified assumptions, not a recommendation. Changing ownership costs, growth assumptions or the horizon changes the comparison.
When to use this calculator
- 1Compare a property-price and rental-cost scenario over the same period.
- 2Explore what changes when rent, borrowing costs or growth assumptions move.
- 3Separate purchase cash, recurring housing costs and hypothetical ending asset values.
Common mistakes to avoid
- ✕Treating assumed property or investment growth as a prediction.
- ✕Leaving transaction costs at zero without checking the relevant property documents and official state sources.
- ✕Adding housing cash outflow to net position, or subtracting it again: the equal-budget investment model already accounts for the cash differences.
- ✕Assuming this includes HRA relief, home-loan tax benefits, capital-gains tax, GST, loan fees, insurance, deposits or relocation costs. It does not.
- ✕Treating an annual crossover as a guaranteed or permanent advantage; later years can cross again.
Frequently asked questions
- Does this tool decide whether renting or buying is suitable?
- No. It compares mathematical scenarios. It does not assess suitability, loan eligibility, property quality or personal preferences.
- Is the renter credited with investing the down payment?
- Yes. The renter invests cash equal to the buyer's down payment and entered purchase transaction costs. Either scenario also invests its positive monthly housing-cost difference at the same assumed return.
- Which costs can I enter?
- Stamp duty, registration and purchase brokerage are entered as rupee amounts. Maintenance is monthly, property tax is annual, and sale costs are a percentage of the modeled final property value. No state-specific rates are supplied.
- What does the crossover year mean?
- It is the first annual observation where the modeled net-position difference changes sign or reaches equality after a difference. It is not an exact month, a prediction, or a guarantee that the relationship stays the same. No crossover is reported when none is observed within the horizon.
- Are tax savings included?
- No. The model excludes income-tax relief, capital-gains tax and investment taxes. Separate tax calculators use their own displayed rules and assumptions.