How to use this Rent vs Buy Calculator

This tool helps you compare the financial outcomes of renting a home versus buying one. Follow this guide to use the calculator effectively:

1. Input Fields

• Monthly Rent : Enter the amount of rent you currently pay each month.
• Annual Rent Increase (%): Specify how much you expect the rent to increase each year. For example, if you expect a 5% increase, enter 5.
• Home Price: Enter the purchase price of the home you are considering buying.
• Down Payment (%): Enter the percentage of the home price that you will pay upfront as a down payment. For example, if you plan to pay 20% of the home price as a down payment, enter 20.
• Mortgage Rate (%): Enter the annual interest rate for the mortgage loan. For example, if your mortgage rate is 8%, enter 8.
• Home Appreciation (%): Enter the expected annual increase in the home's value. For example, if you expect the home to appreciate by 6% annually, enter 6.
• Investment Return (%): Enter the annual return rate you expect on investments. For example, if you expect an 8% return on your investments, enter 8.
• Number of Years: Enter the number of years you plan to evaluate. For example, enter 20 to compare over a 20-year period.
• Annual Miscellaneous Costs (% of Home Price): Enter any additional annual costs related to owning the home, expressed as a percentage of the home price. For example, if these costs are 1% of the home price, enter 1.

2. Calculate

Click the "Calculate" button after entering all the required information. The calculator will perform the following:

1. Buying Analysis:
   • Calculates the future value of the home.
   • Computes the total cost of buying the home, including mortgage payments and miscellaneous costs.
   • Shows the net gain or loss from buying.
2. Renting Analysis:
   • Computes the total rent paid over the period.
   • Calculates the future value of the investment made with the savings from renting versus buying.
   • Shows the net wealth from renting.
3. Comparison:
   • Provides a comparison of the net gain/loss between buying and renting.

3. Analysis

In the "Analysis" section, you will see:

• Buying:
  • Future Home Value: The projected value of the home at the end of the period.
  • Total Cost of Buying: The sum of all costs associated with buying the home, including mortgage payments and miscellaneous costs.
  • Net Gain from Buying: The difference between the future home value and the total cost of buying.
• Renting:
  • Total Rent Paid: The sum of all rent payments over the period.
  • Future Value of Rent Investments: The projected value of the investment made with the savings from renting.
  • Net Wealth from Renting: The difference between the future value of investments and the total rent paid.
• Net Gain/Loss Comparison:
  • Displays the difference between the net gain from buying and the net wealth from renting.

4. Chart

The chart visually represents:

• Wealth from Buying: Shows how the wealth from buying a home changes over the years.
• Wealth from Renting: Displays how the wealth from renting and investing the savings evolves over the same period.

The x-axis of the chart represents the number of years, and the y-axis represents the wealth in ₹.

5. Tips

• Ensure you enter accurate and realistic values to get meaningful results.
• Adjust the input values to see how changes affect the comparison.
• Use the chart to visually understand how your financial situation evolves over time with both renting and buying options.

If you have any questions or need further assistance, feel free to reach out for support. Happy calculating!