Compare 15-year wealth outcomes: buying with home loan vs renting + investing the difference. Stamp duty, maintenance, opportunity cost included.
After 15 years
Buy: ₹2.05 Cr home equity · Rent + Invest: ₹3.50 Cr portfolio
🏠 Buy Path
₹2.05 Cr
💼 Rent + Invest Path
₹3.50 Cr
| Year | Buy: Equity | Rent: Portfolio | Difference |
|---|---|---|---|
| Year 1 | ₹27.50 L | ₹37.11 L | +₹9.61 L |
| Year 5 | ₹62.86 L | ₹88.63 L | +₹25.78 L |
| Year 10 | ₹1.22 Cr | ₹1.88 Cr | +₹65.86 L |
| Year 15 | ₹2.05 Cr | ₹3.50 Cr | +₹1.45 Cr |
At these inputs, renting + investing wins
Two factors flip this calculation: (1) Time horizon — buying needs 7-10+ years to recover stamp duty + interest costs. (2) Price-to-rent ratio — if your monthly rent × 12 × 30 is more than the property price, buying wins faster. Indian Tier-1 cities typically have ratios above 35x, favoring renting. Tier-2/3 cities often below 25x, favoring buying.
Felix shows the rent vs buy math against your real income, savings rate, and other goals — not just generic assumptions.
Download Richify — It's FreeDepends heavily on city, price-to-rent ratio, and how long you'll stay. In Tier-1 cities (Mumbai, Bengaluru, Delhi NCR, Hyderabad, Pune) the rental yield is typically 2-3% — meaning a ₹1 crore flat rents for ₹20-25k/month. With home loan rates at 8.5-9.5%, the cost of borrowing far exceeds the rental yield, making renting + investing the difference often financially superior over 7-10 year horizons. Tier-2 cities sometimes flip the math because prices are lower relative to rent. Always run the numbers for your specific city and timeline.
Beyond the EMI: (1) Stamp duty + registration: 5-8% of property value depending on state (Maharashtra 6%, Karnataka 5%, Delhi 6%, Tamil Nadu 7%). (2) Home loan processing fee: 0.5-1% of loan. (3) Society maintenance: ₹3-15/sqft per month. (4) Property tax: 0.5-1% of value annually. (5) Repair/renovation reserves: 1-1.5% of value annually for older flats. (6) GST on under-construction (5% non-affordable). (7) Brokerage if applicable: 1-2%. Total upfront costs can reach 8-10% of property value.
Generally, you need to stay 7-10+ years for buying to beat renting + investing in Indian Tier-1 cities. The math: stamp duty alone is 5-8% of value (a sunk cost paid upfront), and the first 5-7 years of EMI go mostly toward interest, not principal. If you sell within 5 years, you also pay STCG (slab rate) on any gain. For job mobility scenarios, renting is almost always financially better. For 'forever home' scenarios in Tier-2 cities or at price-to-rent ratios under 20x, buying tends to win.
Rental yield = annual rent / property value × 100. Indian Tier-1 yields are typically 2-3% (gross), among the lowest globally — driven by speculative pricing and limited rental demand at premium price points. Mumbai/Delhi: 2-2.5%. Bengaluru/Hyderabad: 2.5-3.5%. Pune/Chennai: 3-3.5%. Tier-2 cities (Coimbatore, Indore, Lucknow): 4-5%. For comparison, US/UK Tier-1 cities are 4-6%, Singapore 2-3%, Tokyo 4-5%. Low yield = expensive to own relative to renting.
Your primary residence is consumption first, investment second. The asset-allocation argument: a ₹1 crore flat is concentrated, illiquid, leveraged exposure to one city's real estate market — not great diversification if it's most of your net worth. The behavioural argument: forced savings via EMI is psychologically valuable. The tax argument: long-term capital gains on residential property qualify for indexation and Section 54 (rollover into another house) exemption. Net: own a house if it fits your life plan, but don't model it as a portfolio asset that needs to outperform equity.
Yes — we apply Section 24(b) interest deduction (₹2L/year cap on self-occupied property) and Section 80C principal repayment (within the ₹1.5L overall 80C cap) at a 30% marginal tax bracket. For the New Tax Regime, these deductions don't apply (only 80CCD(2) employer NPS does), so toggle to old regime if you'll claim them. We assume self-occupied; let-out property follows different rules (no ₹2L cap on interest, but rental income is taxable).