A Bengaluru software engineer deciding between renting and buying
Paying ₹42,000 a month in rent while a ₹1.1 crore apartment tempts. Modelling the EMI, stamp duty and the opportunity cost of the down payment changes the answer.
Situation
A 31-year-old engineer in Whitefield pays ₹42,000 a month in rent, rising about 7% a year at renewal.
A 3BHK in the same micro-market is listed at ₹1.1 crore. Savings available for a down payment are ₹25 lakh.
The obvious framing — 'rent is money down the drain' — ignores stamp duty, registration, maintenance and what the ₹25 lakh would earn if it stayed invested.
What they calculated
Monthly outflow and total interest on the ₹86 lakh loan.
Stamp duty, registration, GST and one-time buying costs on top of the sticker price.
What the ₹25 lakh down payment plus the EMI-minus-rent gap would compound to instead.
Rent escalation at 7% a year over the same 20-year horizon.
Inputs used
- Property price
- ₹1,10,00,000
- Down payment
- ₹25,00,000 (22.7%)
- Loan amount
- ₹85,00,000
- Interest rate
- 8.6% p.a.
- Tenure
- 20 years
- Current rent
- ₹42,000 / month, +7% p.a.
- Stamp duty + registration
- 5% + 1% (Karnataka)
- Assumed equity return
- 11% CAGR
The numbers
- The EMI on ₹85 lakh at 8.6% for 20 years is about ₹74,300 a month — ₹32,300 more than current rent in year one.
- Total interest over the tenure is roughly ₹93.3 lakh, so the ₹1.1 crore flat costs about ₹2.03 crore in nominal cash before maintenance.
- Stamp duty at 5%, registration at 1% and legal fees add about ₹7.2 lakh that is not recoverable at resale.
- Leaving ₹25 lakh invested at 11% and investing the ₹32,300 monthly gap grows to roughly ₹1.9 crore in 20 years.
- Rent at ₹42,000 escalating 7% a year totals about ₹2.06 crore over the same 20 years.
- With 4% annual property appreciation the buy case overtakes the rent-and-invest case around year nine.
Outcome
Buying wins only if the flat is held past year nine and appreciation stays near 4% — well under the 8–10% the seller quoted.
The decision flipped from a gut 'buy now' to a conditional 'buy if you will stay eight years or more'.
The engineer increased the down payment to ₹32 lakh, cutting the EMI to about ₹68,100 and total interest by ₹7.6 lakh.
A yearly prepayment of one EMI shortened the loan by roughly 3 years 4 months in the same model.
Enter your own price, rate and tenure to see the same break-even for your city.
Questions this raises
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No quote on this page is attributed to a real individual. Figures are modelled with the public Calculyx AI calculators using the inputs listed above.