Rent Vs Buy Calculator India – A Comprehensive & Accurate Calculator

This Rent vs Buy Calculator is a comprehensive excel based calculator that can help you in resolving your dilemma of renting vs buying a home in India. This calculator takes into account all major factors and is always updated so that you get the most accurate results.

Also check other intangible factors given below, that affect your decision of Renting or Buying a home.

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You can download this Rent vs Buy Calculator for offline use. Like, Tweet or +1 to show Excel Worksheet link.

Understanding Results – Rent vs Buy Calculator

  • Annual Savings is the amount you gain by buying a house after factoring in the renting costs till that particular year. To calculate total savings till year N, simply multiply Annual Savings (year N) by N.
  • Positive Savings mean that Buying is favorable and Negative savings mean that renting is favorable.
  • The calculator plots a chart of annual savings year wise and tells you exactly in which year the Annual Savings become positive which means that you should stay minimum for that many years to favor your Buying Decision. In case, the chart shows negative savings for all 30 years of analysis, then that means Renting is always better for your particular situation. Positive Savings throughout means that Buying is always better.

Other Factors that affect your Renting vs Buying decision

Factors that favor Buying:

  1. Stability – While renting, you are always bothered about rental increases or when your landlord may decide to sell the house. If you stay in your own house, you don’t have to worry about such issues.
  2. Making Improvements – When you own a house, you can fix up your bathrooms the way you want, build a modular kitchen and paint your walls orange or yellow if you like. While if you stay in a rented house, you have to comply by all conditions imposed by landlord.
  3. Capital Appreciation – India is a developing economy and over long-term prices will keep going up as the income levels go up. If you do not buy now, same property may go out of your budget later.
  4. Forced Savings – When you decide to buy a home, first you force yourself to save for the high downpayment and then you indirectly save when you pay off the home loan.
Rent vs Buy Home

Factors that favor Renting:

  1. Flexibility – While buying a house gives stability, renting offers flexibility. In today’s economy many people move to different cities every 2-3 years to explore better job prospects. If your time horizon is short term and if you are unsure of the city you want to settle in, renting is a better option.
  2. Housing Overpriced – Like stock markets, Real Estate has a tendency to create bubbles. If the housing market is overpriced in your city, it is better to stay on rent.
  3. Low Transaction Costs – Buying and selling a house has high transaction costs that include Registration charges, Stamp duty charges and Brokerage Fees. To recover these costs you have to stay a minimum number of years in your owned house. In case of renting, transaction costs are limited to rental brokerage which becomes negligible if you stay for 2-3 years in the same house.
  4. No Commitment – When you rent a house, you can move out of the house by giving just a month’s notice whereas if you have to move out of your owned house either by renting out the house or by selling the house, it requires much more effort, time and money.
  5. Low Monthly Outgo – Monthly outgo in renting is much lower compared to buying where you have to also pay for the Home Loan EMI. In an uncertain economy when jobs are at risk, it is better to stay on rent.

In a nutshell, Buying is preferable over long-term and Renting is preferable over short-term.

Hence, this rent vs buy calculator is designed to tell you exactly for how many years you must stay in the house to justify your Buying decision.

Also Read: Why invest in Real Estate – 10 killer reasons

Why use this Rent vs Buy Calculator?

  • Simple & User friendly – Though this calculator does complex calculations in the background, the user interface is made clutter free with minimum inputs and important decision making results displayed.
  • Accurate – The calculator factors in all major inputs such as Property Costs, Tax Savings, Loan Inputs, Inflation, Capital and Rental Appreciation etc. to give you the most accurate results.
  • Always Updated – This calculator is hosted on our cloud drive. Anytime changes are made in tax slabs etc., we immediately update it in our calculator and you get a real time updated calculation.
  • Sharable & Printable – This Rent vs Buy calculator is made using Microsoft Excel Web App. You can easily share this calculator via URL :

[box type=”shadow” align=”aligncenter” ]!AAJLtvxgsoP9JLs& [/box]

or Embed it in your website or blog using the following embed code:

[box type=”shadow” align=”aligncenter” ] <iframe width=”604″ height=”817″ frameborder=”0″ scrolling=”no” src=”’Sheet1′!B22&Item=’Sheet1′!A1:E36&wdHideGridlines=True”></iframe> [/box]

You can also print results of your Rent vs Buy Calculation by opening this workbook in full-size from bottom of the calculator.

How to Use Rent vs Buy Calculator?

The calculator has default inputs and results. You can change all inputs in yellow cells to suit your situation and the calculator will automatically calculate annual savings that you will make while buying a house as compared to renting the same house.

Buying Inputs

Property Price – Enter current price of property that you want to purchase.

Downpayment – Enter the cash component that you would put in the property from your personal savings. In case, you are not planning to take a loan you can put Property Price here.

Loan Amount – The calculator automatically calculates the loan amount by subtracting Downpayment amount from the Property Price.

Loan Interest Rate – Enter the latest home loan interest rate here. You can get latest rates from various Bank website. For simplicity, you can assume latest SBI home loan interest rate.

Loan Tenure – No. of years for which you want to take home loan.

EMI payable every month – The calculator automatically calculates EMI (Equated Monthly Installment) for your loan.

Annual Property Appreciation – Enter annual appreciation rate in percentage that you expect your property to appreciate at over long term. Please bear in mind that some properties have appreciated at 20-40% year on year in the past. This is not true over long term. The calculator is most sensitive to this one single input. So, be careful while entering this percentage. Have a look at last 20-30 year data to most accurately fill this detail.

Monthly Property Maintenance Costs – These costs include monthly maintenance charged by Apartment Association or RWA plus all other renovation and upkeep maintenance costs like painting, repairs etc. that you will have to bear as an owner of property.

Annual Property Tax – Property Tax, charged by Municipal Corporation of the city, is borne by the owner of the property. This is generally charged based on the built-up area of your property. You can get latest rates from website of Municipal Body. Otherwise, fill out a rough estimate.

Renting Inputs

Monthly Rent – Fill out the monthly rent of a similar property that you are planning to purchase.

Annual Rent Appreciation – Appreciation rate in percentage at which you expect the Rent of the property to appreciate year on year over long term. Again rentals have appreciated at 10-25% in the past which is not true over long term. In the long term, rentals have a tendency to follow the inflation pattern. So, be careful while filling this detail.

Rental Security Deposit – Security Deposit or Advance Rental Deposit varies from state to state. It ranges from 2 – 11 months of rent amount. The higher the Security Deposit, the higher interest amount you lose. Fill out the Security Deposit that is prevalent for a similar property in your city.

Income Inputs

These inputs are taken to factor tax savings in the calculator.

Net Monthly Take Home Salary – Enter your monthly take home salary that you get after tax and other deductions.

Basic Salary – Enter your monthly basic salary.

HRA – Enter your monthly House Rent Allowance.

Applicable Income Tax Rate – Enter your effective or marginal tax rate after accounting for standard deductions, savings and reimbursements.

Expected Annual Salary Hike – Enter expected average annual rise in your salary in percentage over long term.

Other Inputs

Inflation – Enter long term expected annual inflation rate. Inflation in a developing economy in India could range from 5 to 10% for next few decades.

Current rate on your Fixed Deposit/ Bank Deposit – In case of renting, you can invest your Downpayment amount in an alternative investment like FD, Bank Deposit, PPF, Mutual Fund, Equity Markets etc. Enter your expected annual returns from your alternative investment here.

Registration & Stamp Duty – These charges vary from state to state and also vary depending on type of ownership – female, male, joint ownership etc. Registration and Stamp Duty charges range from 4-10% of property price or circle rates, whichever is higher. Fill out charges for your situation.

Brokerage – When you sell and buy a property, brokerage is a significant cost which cannot be ignored. Generally, brokerage costs vary from 1-2% of property price for seller and buyer separately. Enter brokerage cost for your city. Do not put a zero here. Every transaction has a cost. Even if you try to sell or buy a property yourself, you have to invest in the form of time, efforts and money. Your transaction may take some time to happen and by that time the property prices will also vary. So, do not ignore these costs.

To make the calculator simple and yet effective, smaller factors like rental brokerage, moving costs etc. which do not affect results over long term are ignored. In case, you want to include more such costs in the model, you can simply add in the monthly or annual costs in the Buying or Renting inputs.

Over to You

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  1. Joel says

    The link given is not working. Can you make this a downloadable worksheet please?

    1. Team AY says

      Hi Joel
      This is already a downloadable worksheet. The download link is available immediately below the worksheet. Just tried out, the link is working fine.
      Please let us know if you still face any problem.

  2. shan says

    onedrive link for xsl sheet link is not working.. it says
    “This item might not exist or is no longer available
    This item might have been deleted, expired, or you might not have permission to view it. Contact the owner of this item for more information.” pls check

    1. Team AY says

      Thanks for feedback Shan.

      Just checked the link. It is working fine. You may try opening in another browser and make sure that you are using the latest version of browser. If you still face any problems, do let us know.

  3. Vaibhav says

    File does not exist….Same issue as Shan

    “This item might not exist or is no longer available
    This item might have been deleted, expired, or you might not have permission to view it. Contact the owner of this item for more information.”

    Could you please email me the working xls… thanks

  4. Amit says

    The link is not working.

  5. Amit says

    This item might not exist or is no longer available
    This item might have been deleted, expired, or you might not have permission to view it. Contact the owner of this item for more information.

    Go to OneDrive

  6. Gyan says

    link is not working even after I did a FB like.

    1. Team AY says

      Sorry for inconvenience! Link is updated.
      You can download it now.

  7. Neha says

    Can you customize it for joint loan? When two person will save on tax?

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