Rent vs Buy Calculator
The ultimate financial showdown. We use the "Opportunity Cost" method to mathematically determine if you should sign the lease or the deed.
Parameters
Net Worth Projection
Verdict
Financially Better To
buy
Difference after 20y$904,049
Buy Net Worth$1,356,320
Rent Net Worth$452,271
Interpretation
Buying wins because property appreciation (5%) and forced savings (equity buildup) outweigh the returns you'd get from investing the difference (7%).
The Math Behind Rent vs Buy
It's not as simple as comparing "Monthly Rent" vs "Monthly EMI". To get the true picture, we track the Net Worth of two parallel universes over time:
Universe A: You Buy
- You pay a Down Payment (Cash Outflow).
- You pay Monthly EMIs + Maintenance.
- Your Asset (Home) appreciates in value.
- Your Loan Balance decreases.
- Net Worth = Property Value - Loan Balance
Universe B: You Rent
- You invest the Down Payment amount instead.
- You pay Monthly Rent.
- If (Rent) is cheaper than (EMI + Maintenance), you invest the difference.
- If (Rent) is more expensive, you withdraw from your investments.
- Net Worth = Value of Investment Portfolio
The calculator projects these two lines forward to see which one ends up higher.
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