Rs 40,000 rent vs Rs 1 lakh EMI: CA explains the math changing India’s homeownership debate

For decades, buying a home was seen as the ultimate financial milestone in India. Renting was often treated as temporary, unstable, or even financially wasteful. But rising property prices, expensive home loans, and changing investment habits are now forcing many young professionals to rethink that belief. A fresh debate is growing around one uncomfortable question: what if renting and investing the difference actually creates more wealth than owning a house? A recent breakdown by a chartered accountant is now adding fuel to that conversation online.

Nitin Kaushik recently shared his take on why renting may currently make more financial sense than buying property in several Indian metro cities. According to him, the numbers behind homeownership in cities like Gurugram and Mumbai are creating what he describes as an “interest trap” for buyers.

He explained, “Renting is not throwing money away; it may actually be the smartest way to avoid the interest trap in urban India right now.” Kaushik pointed toward the gap between rental yields and home loan interest rates. He claimed that in many major cities, rental yields on residential properties currently hover around 2.5% to 3%, while home loan interest rates are significantly higher, often around 8.5% to 9%.



This difference, he argued, creates a situation where buyers end up paying a very large premium purely for ownership.

CA explains the math

To explain the math, he used the example of a Rs 1.5 crore flat. According to him, a similar property could often be rented for roughly Rs 40,000 per month, while the EMI on purchasing the same house could climb close to Rs 1 lakh. Instead of directing that full amount toward a loan, he suggested investing the remaining Rs 75,000 into an index fund.

Over a 10-year period, he believes that the wealth generated through disciplined investing could potentially exceed the equity built in a property that may appreciate slowly over time.


Kaushik added, “If you rent a Rs 1.5 Cr flat for Rs 40,000 and invest the remaining Rs 75,000 you would have spent on an EMI into an index fund, your net worth after 10 years could far exceed the equity built in a slow-moving property.”

Financial liquidity

His argument focuses heavily on liquidity and flexibility. Real estate, while emotionally reassuring for many families, often locks large amounts of money into a single asset. Investments in index funds, on the other hand, remain more liquid and can continue compounding without the additional costs associated with homeownership, such as maintenance, registration fees, property taxes, and loan interest.


He further explained that until rental yields rise closer to prevailing interest rates, renting may remain mathematically stronger for wealth creation in urban India.

“Until rental yields and interest rates converge, renting remains the stronger mathematical strategy for building liquid wealth,” he wrote.