A worked example: ₹25,000 rent vs a ₹60 lakh home, 10-year horizon
Renting at ₹25,000/month (escalating 5% a year) against buying a ₹60,00,000 home with a ₹12,00,000 down payment, an 8.5% loan over 20 years, 5% home appreciation, and a 10% return if the down payment were invested instead — over a 10-year horizon, buying comes out cheaper, with a net cost of −₹35,74,705.94 (a net gain) against renting's net cost of ₹18,60,876.81.
The renting side: total rent paid minus investment growth
Total rent paid over 10 years of 5% escalation comes to ₹37,73,367.76. The ₹12,00,000 down payment, if invested instead at 10% for 10 years, would have grown to ₹31,12,490.95 — a gain of ₹19,12,490.95. Net cost of renting = ₹37,73,367.76 − ₹19,12,490.95 = ₹18,60,876.81.
The buying side: total EMI plus down payment, minus home value
Total EMI paid over the same 10 years comes to ₹49,98,661.82. Adding the ₹12,00,000 down payment gives ₹61,98,661.82 spent. But the home itself, appreciating 5% a year, is worth ₹97,73,367.76 at the 10-year mark. Net cost of buying = ₹61,98,661.82 − ₹97,73,367.76 = −₹35,74,705.94 — a negative "cost" because the home's value has grown past what was spent on it.
Why the comparison horizon matters
Extending the identical assumptions to a 20-year horizon (matching the full loan tenure) changes both sides — more years of rent escalation and investment growth for renting, more years of home appreciation and a fully paid-off loan for buying — so the "cheaper option" isn't fixed; it depends on how long the comparison actually runs, not just the starting numbers.