Rent vs Buy Calculator
Would you be richer renting and investing the difference?
Home value at horizon
0
before loan payoff & sale tax
Total interest paid
0
over the comparison horizon
24(b)+80C tax saved
0
old tax regime only
Invested corpus if renting
0
down payment + monthly surplus, invested
Renting + investing nets you
What this doesn't model
HRA exemption (if you're salaried and renting) tilts further toward renting; §54 reinvestment can defer the sale-side LTCG on the buy side. Both are real, both are excluded for simplicity — see notes below.
Buy side: EMI is calculated on the loan amount at your assumed rate; interest is deductible up to ₹2,00,000/year under §24(b) and principal up to ₹1,50,000/year under §80C — both only apply if you're on the old tax regime. Maintenance/property tax is assumed at 1% of current home value per year. At the horizon, the home is treated as notionally sold: sale-side long-term capital gains are taxed at 12.5% above a ₹1,25,000 exemption (Section 54 reinvestment rollover, which can defer this entirely, isn't modeled). Rent side: the down payment plus any month where buying costs more than renting is treated as invested at your assumed return; HRA exemption (a further tax benefit for salaried renters) is not modeled and would tilt the comparison further toward renting. This is a simplified simulation, not financial advice — real outcomes depend on your specific tax situation, loan terms, and how markets actually move.
Frequently asked questions
What is EMI and how is it calculated?
EMI (Equated Monthly Installment) is the fixed monthly payment that repays a loan over its tenure, made up of principal and interest combined. It's calculated from the loan amount, interest rate, and tenure using a standard amortization formula -- the same one this calculator uses, so you can see the exact monthly figure and how much of each payment goes to interest versus principal.
Does prepaying a loan actually save money?
Yes, almost always -- a prepayment reduces the outstanding principal, which reduces the interest charged on every remaining installment. The earlier in the loan you prepay, the more you save, since interest is front-loaded in most amortization schedules. Check for prepayment penalties with your lender first.
What's the difference between flat rate and reducing balance interest?
Flat-rate interest is charged on the full original loan amount for the entire tenure, even as you pay it down -- reducing-balance interest is charged only on what's still outstanding, so it falls every month as you repay. A flat rate quoted at the same percentage as a reducing-balance rate is effectively much more expensive; always confirm which method a lender is using.
Will improving my credit score lower my loan interest rate?
Usually, yes. Lenders price risk into the interest rate they offer, and a higher credit score signals lower risk, which typically qualifies you for better rates. It varies by lender and loan type, but it's one of the few loan-cost factors largely within your control before you apply.
Estimates only, not financial advice. See our Disclaimer.
