What Is Better – Paying Loan EMIs For Your Own Home Vs Renting A House?

Today, we'll tackle the dilemma: pay rent or payEMI. For many young earners, deciding between renting and buying a home with a home loan can be perplexing. On one side, there's the allure of homeownership, while on the other, renting offers flexibility without the weight of hefty EMIs. Unfortunately, there's no one-size-fits-all solution. However, by crunching some basic numbers, we can guide you to make the choice that aligns best with your lifestyle and financial capacity.

Deciding between renting and buying a home involves a complex financial analysis. Let's break down the numbers to help you make an informed decision.

• Monthly rent: Rs 25,000
• Annual rent in the first year: Rs 3 lakh
• Rental yield: 3%
• Cost of rented property: Rs 1 crore
• Assumed annual rental increase: 10% p.a.
• Total rent paid over 15 years: Rs 89.8 lakh

• Cost of purchased property: Rs 1 crore
• Loan-to-Value (LTV) ratio: 75%
• Downpayment required: Rs 25 lakh
• Home Loan Amount: Rs 75 lakh
• Assumed annual capital appreciation: 5% p.a.
• Assumed Home Loan interest rate: 7% p.a.
• Stamp duty charges: 6% of the property amount
• Property registration charges: 1% of the property amount
• Home Loan tenure: 15 years
• Total home loan cost: Rs 1.21 crore
• Expected EMI: Rs 67,412

Additionally, considering investing the down payment of Rs 25 lakh in equity mutual funds for 15 years could yield a corpus of around Rs 1.36 crore at a conservative 12% p.a. return.

• Property cost: Rs 60 lakh
• Stamp duty charges: 6% of the property amount
• Property registration charges: 1% of the property amount
• LTV ratio: 80%
• Downpayment required: Rs 12 lakh
• Home Loan Amount: Rs 48 lakh
• Assumed annual capital appreciation: 5% p.a.
• Assumed Home Loan interest rate: 7% p.a.
• Home Loan tenure: 15 years
• Total home loan cost: Rs 97 lakh
• Expected EMI: Rs 53,930

In purely financial terms, renting may save you close to Rs 72 lakh and Rs 10 lakh respectively in Scenario 2 and the sub-scenario. However, this decision depends on various factors such as financial readiness, lifestyle, and long-term goals.


In the current scenario, low home loan interest rates, concessional stamp duty charges, and tax benefits make owning a home an attractive option. However, renting offers flexibility and lower total cost.

For short-term solutions, renting may be preferable until one is financially capable of contributing a down payment and repaying home loan EMIs. In the long run, owning a home tends to outweigh renting in terms of tax benefits, freedom, and asset ownership. However, individual circumstances and priorities ultimately determine the best choice.

Also Read: ITR 2024: Old Vs New Tax Regime, Which Is Better For You?

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