Renting vs Buying Home

Every Diwali, the pressure hits differently. Relatives asking, “Flat liya ki nahi?” Parents forwarding housing ads. Your married friend posting keys-in-hand reels. Somewhere between society’s expectations and Instagram posts, buying a home stopped being a financial decision and became an emotional one.

Let’s fix that. Let’s do what your family won’t — actual math.

The Rent-vs-EMI Calculator You Actually Need

Forget vague comparisons. Let’s run real numbers for a ₹60 lakh apartment — a pretty standard 2BHK in most Indian metros.

If you buy (with a home loan):

• Down payment (20%): ₹12,00,000
• Loan amount: ₹48,00,000
• Interest rate: 8.75% (average in 2025)
• Tenure: 20 years
• Monthly EMI: ~₹42,800
• Total interest paid over 20 years: ~₹54,72,000
• Total money out of your pocket: ₹1,14,72,000 — for a flat worth ₹60L today

You read that right. You pay almost double the apartment’s price.

If you rent the same apartment:

• Monthly rent: ~₹18,000 (typical 2BHK rent-to-price ratio in India)
• Annual rent increase: ~5%
• Total rent paid over 20 years: ~₹71,50,000

That’s a ₹43 lakh difference. But we’re not done yet.

The Opportunity Cost Nobody Shows You

Here’s where it gets really interesting. That ₹12 lakh down payment — what if you invested it instead?

• ₹12,00,000 lump sum in an index fund at 12% CAGR
• After 20 years: ₹1,15,56,000

Now add in the monthly difference. Your EMI is ₹42,800, your rent is ₹18,000. That’s ₹24,800 extra per month you’re spending on EMI. If you invested that gap via SIP:

• ₹24,800/month SIP at 12% for 20 years = ₹2,46,00,000+

Combined? You’d be sitting on over ₹3.6 crore in investments. Meanwhile, your flat that cost ₹60L might be worth ₹1.5–2 crore (assuming 5–6% annual appreciation, which is generous for most Indian cities).

The math is brutal. Renting and investing wins by a landslide in most scenarios. But math isn’t everything — and that’s where city context matters.

City-Wise Reality Check

Mumbai — The Rent City

Mumbai’s rental yields are among the lowest in India — around 2-3%. A ₹1.2 crore flat rents for ₹25,000-30,000/month. This means renting is almost always the financially smarter choice here. Property prices are absurdly high relative to income, EMIs will eat 50-60% of most salaries, and appreciation has slowed significantly in many micro-markets. Unless you’re inheriting property or have generational wealth, rent in Mumbai.

Bangalore — The Toss-Up

Bangalore is interesting. Rental yields are slightly better (3-4%), and certain areas like Whitefield, Sarjapur, and Electronic City have seen genuine appreciation. If you’re in a stable tech job, plan to stay 10+ years, and find something in the ₹50-70L range in an upcoming area, buying can make sense. But if you’re in your 20s and switching companies every 2 years? Rent. You’ll probably move across the city three times before settling.

Pune — The Sweet Spot

Pune offers the best rent-to-buy equation among major metros. Decent 2BHKs in Hinjewadi, Wakad, and Baner are available in the ₹40-55L range. EMIs are more manageable. The city is growing outward, and infrastructure projects (metro, ring road) are actually moving. If you have a plan to stay, Pune is where buying starts making practical sense earlier than other cities.

When Renting Wins

• You’re under 28. Your career is volatile. You might relocate for a better role tomorrow. Locking yourself into a 20-year EMI at this stage is financial handcuffs.
• Your down payment IS your entire savings. If buying wipes out your emergency fund, you’re one medical bill away from disaster.
• You’re in a high-cost city with low rental yields. Mumbai, parts of Delhi — the numbers simply don’t work.
• You value career mobility. The best salary jumps come from switching cities/companies. Hard to do when you own a flat in Thane.
• You haven’t built an investment portfolio. ₹15L sitting in savings collecting dust should go into index funds, not a builder’s pocket.

When Buying Wins

• You’ve lived in the same city for 5+ years and plan to stay. Stability changes the equation completely.
• Your EMI will be under 30% of take-home pay. Not 40%, not 50%. Thirty percent. This gives you breathing room.
• You have 25-30% down payment AND a separate emergency fund. Two different pots of money. Non-negotiable.
• Rent in your area is climbing above 4% of property value annually. At that point, the rent-vs-EMI gap shrinks enough to justify buying.
• You have a family with school-going kids. Stability has non-financial value. Changing houses every 11 months because landlords won’t renew is genuinely exhausting.
• You’ve already built ₹20L+ in investments. The home isn’t your only asset — it’s an addition to a portfolio.

Your Decision Checklist

Before you sign anything, go through this honestly:

• Can I see myself in this city for 10+ years?
• Is my EMI under 30% of my take-home salary?
• Do I have 25-30% down payment saved WITHOUT touching my emergency fund?
• Have I already started investing (MFs, PPF, NPS) separately?
• Am I buying because I need a home — or because someone told me rent is “waste”?
• Have I factored in registration, stamp duty, interiors, society charges, and maintenance?
• Will I still be financially comfortable if interest rates rise by 1-2%?

If you checked fewer than 5 boxes, you’re not ready. And that’s completely fine.

Renting isn’t failure. Renting is a conscious financial strategy. The real waste isn’t rent — it’s a ₹55 lakh interest payment on a flat you bought because uncle said so.