How it works & FAQs
The math behind the numbers, plus answers to the questions we hear most often.
What does this calculator actually compare?
Net wealth at the end of the loan tenure. Buy side: appreciated property value minus total paid (down payment + EMIs) plus tax savings from Sec 24 & 80C. Rent side: down payment invested at the opportunity rate plus annual EMI-rent difference invested each year.
How exactly is the calculation done, step by step?
Both sides run year by year over the full loan tenure and are compared at the end.
Buy side — each year:
- The loan balance is amortised month by month to split each EMI into interest and principal.
- Tax savings are applied: up to ₹2L of annual interest qualifies under Section 24, up to ₹1.5L of principal under Section 80C — both at your tax slab rate.
- The after-tax EMI cost (EMI minus those savings) is added to a running total.
At the end: Net wealth (Buy) = final property value − (down payment + total after-tax EMI paid).
Rent side — each year:
- The down payment is invested and grows at the opportunity return rate you set.
- If your annual EMI exceeds annual rent, that surplus is also invested at the same rate. Once escalating rent catches up with the EMI, no further surplus is added — only the existing corpus keeps compounding.
- Cumulative rent paid is tracked separately.
At the end: Net wealth (Rent) = investment corpus − total rent paid.
The verdict compares these two net wealth figures. Whichever is higher wins.
Why does renting often win in Indian metros?
Metro rental yields are typically 2–3% while equity market returns are 11–12%. The opportunity cost of locking up a large down payment (₹20L–₹2Cr) is enormous over 20 years. Add high stamp duty, registration, and maintenance costs — and the math often favours disciplined renting and investing.
What about emotional and lifestyle factors?
This tool does the math only. Stability, customisation, freedom from landlords, social status, and the safety of owning your home are valid non-financial reasons to buy. The calculator helps you understand the financial cost of those preferences — what you pay for peace of mind.
Are there any tax benefits I'm missing?
The model covers Section 24 (interest deduction up to ₹2L/yr) and Section 80C (principal repayment up to ₹1.5L/yr). Section 80EEA for affordable housing (₹45L) is not modelled. The model assumes self-occupation, not let-out property.