Buying a home
Renting
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Verdict
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Net worth, year by year
If you buyIf you rent + invest
Year-by-year breakdown
| Year | EMI + maintenance (year) | Rent (year) | Loan balance | Net worth if buying | Net worth if renting |
|---|
How the calculation works
Both start with the same amount of money. The buyer spends it on the down payment, stamp duty and interiors; the renter invests the same amount. Each month, whoever spends less invests the difference. At the end:
- Net worth if buying = the home’s value at that time (minus 1% selling cost) − loan outstanding + the buyer’s own investments.
- Net worth if renting = the total value of the investments.
Price-to-rent ratio
Divide the home price by one year’s rent. In big cities this is often 25–35, meaning rent is only 3–4% of the home’s price each year. The higher the ratio, the cheaper renting is. If it is below 20, buying pays off sooner.
This is an estimate, not advice. A home is not only a money decision: think about stability, children’s schooling and the chance of moving cities. Talk to a financial advisor before a big decision.