Why is my monthly mortgage lower than rent but buying still loses?

Because the mortgage is not the cost of owning. Add maintenance, tax and insurance, and then add what the down payment would have earned elsewhere, and the comparison usually changes.

What matters most in this calculation?

How long you stay, and the gap between property appreciation and investment return. Those two swamp everything else, including the interest rate.

Finance & Loansmortgage

Rent vs Buy Calculator

Rent against buy over the years you will actually stay, comparing net worth rather than monthly outgo. The honest comparison invests the down payment and every monthly difference, which is the step most versions of this skip.

Also called: should i rent or buy, buy vs rent house, renting vs buying calculator.

Which comes out ahead

Renting and investing the difference comes out ahead

Renting and investing the difference comes out ahead over 10 years. Buying leaves you with ₹85,51,552 and renting while investing the difference leaves ₹1,03,28,633, a gap of ₹17,77,081.

Net worth if you buy

₹85,51,552

Net worth if you rent and invest

₹1,03,28,633

Difference

₹17,77,081

Total rent paid

₹45,28,041

Total loan interest paid

₹47,44,487

Property worth at the end

₹1,30,31,157

Loan still outstanding

₹44,79,605

Year buying pulls ahead

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Net worth either way

Hover or drag for values

BuyingRenting and investing

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Buying leaves you owning a property that has appreciated, less whatever loan is left. Renting leaves you with the down payment you never spent, plus every month where rent was cheaper than the mortgage and the ownership costs, all compounded at what you would have earned. Comparing monthly payments alone always flatters buying, because it ignores both the opportunity cost of the deposit and the maintenance, tax and insurance that come with owning. The break-even year is the point where the two lines cross, and staying less than that generally favours renting.

buying leaves property value minus loan balance;  renting leaves the down payment and every monthly saving, compounded at the investment return

V_n: Property value at the horizon (currency)
B_n: Loan balance at the horizon (currency)
D: Down payment, invested instead (currency)
i: Investment return (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a ten-year horizon in India

Property price: ₹80,00,000
Down payment: ₹16,00,000
Loan interest rate: 8.5%
Loan term: 20 years
Monthly rent for a similar home: ₹30,000
Rent growth a year: 5%
Property appreciation a year: 5%
Return if you invested instead: 10%
Yearly ownership costs, as a share of price: 1.5%
How long you will stay: 10 years

Which comes out aheadRenting and investing the difference comes out ahead

80,00,000 compounded at 5% for ten years, computed independently

Open this example

paying cash leaves no loan at all

Property price: ₹80,00,000
Down payment: ₹80,00,000
Loan interest rate: 8.5%
Loan term: 20 years
Monthly rent for a similar home: ₹30,000
Rent growth a year: 5%
Property appreciation a year: 5%
Return if you invested instead: 10%
Yearly ownership costs, as a share of price: 1.5%
How long you will stay: 10 years

Which comes out aheadRenting and investing the difference comes out ahead

boundary: a fully funded purchase borrows nothing

Open this example

a one-year stay barely moves anything

Property price: ₹80,00,000
Down payment: ₹16,00,000
Loan interest rate: 8.5%
Loan term: 20 years
Monthly rent for a similar home: ₹30,000
Rent growth a year: 5%
Property appreciation a year: 5%
Return if you invested instead: 10%
Yearly ownership costs, as a share of price: 1.5%
How long you will stay: 1 years

Which comes out aheadRenting and investing the difference comes out ahead

degenerate case: one year of appreciation

Open this example

Method and limits

What it assumes

The renter genuinely invests the difference every month. Most do not, and that is the single biggest reason the real answer differs.
Ownership costs are a flat share of the property price each year, covering maintenance, tax and insurance.
Transaction costs on purchase and sale are not included.

What it deliberately does not model

Tax relief on mortgage interest and on capital gains varies by market and is not applied.
It cannot price security of tenure, the freedom to move, or wanting to paint the walls.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Why is my monthly mortgage lower than rent but buying still loses?: Because the mortgage is not the cost of owning. Add maintenance, tax and insurance, and then add what the down payment would have earned elsewhere, and the comparison usually changes.
What matters most in this calculation?: How long you stay, and the gap between property appreciation and investment return. Those two swamp everything else, including the interest rate.