Two versions of the same decade, side by side: a home loan with its real EMI and interest, against renting and investing the gap. Change price growth, years and the return on savings, and find the break-even that flips the answer.
The brief it was built from
Someone in a big Indian city is weighing buying a flat with a home loan against renting a similar one and investing the difference. Play both lives forward, show where the money goes, and say what would change the answer.
What is real, and what is a scenario
Real data
- The EMI is computed with the standard reducing-balance formula, EMI = P r (1+r)^n / ((1+r)^n − 1); the engine reproduces the textbook worked example of ₹25 lakh at 9% for 20 years (₹22,493 a month)
- Each year's interest and principal come from that same schedule, month by month
- The break-even price growth is solved numerically from the model, not quoted
- Stamp duty slabs of 2%, 3% and 5% by price, and a registration fee of 1% to 2%, are the ranges published by banks and developers for Karnataka in 2026; the 7% used for all up-front fees is a rounded figure inside that range
Scenario & assumptions
- The flat costs ₹1 crore, a round scenario figure, not a listing
- A 20% down payment, a 20-year loan and an 8.0% rate; published 2026 bank rates sit near 7.25% to 8.5% and a floating rate will move
- Up-front buying costs of 7% of the price; sources disagree on the registration fee (1%, 2% or a cap), so the visitor is told to check the state calculator
- First-year rent of 3.5% of the price a year (about ₹29,000 a month); published gross yields for Bengaluru range from about 3.5% to 4.5%
- Rent and society charges both rise 5% a year; society charges start at ₹4,000 a month
- The renter locks a refundable deposit of six months' rent that earns nothing, and invests every rupee the buyer spends beyond the rent, at 6% or 10% a year
- The flat gains 3%, 6% or 9% a year in value; no one can know this in advance, and it is the input that decides the answer
- Selling costs 1% in brokerage; income tax benefits on the loan, capital gains tax and tax on the renter's returns are left out
- Household take-home of ₹2 lakh a month, growing 5% a year, drives the Room in the month meter, which is illustrative, with 60% of take-home as its ceiling
- The loan, the rent and the savings return are held fixed for the whole run
What you leave with
- In year one most of the EMI is interest, so a short stay leaves little equity
- Price growth is the input that decides it; the break-even is a single number you can check against a locality's history
- Rent rises while the EMI stays put, so the monthly squeeze eases with time
- What the model leaves out (tax, repairs, a move, the value of owning) and what to ask a bank and an adviser
Sources
3D with three.js (MIT) · Narration voice: Kokoro-82M v1.0, voice af_heart (kokoro-onnx 0.6.1). Apache-2.0 (Kokoro-82M weights).
Reliability & operations
Original
Learning paths
Original
Learning paths
Original