Investor query: Is it wiser to keep paying Rs 20,000 rent or turn it into an EMI to build my own asset?

Right now, I’m paying Rs 20,000 in rent every month. Wouldn’t it make more sense to redirect that amount towards an EMI and start building my own asset instead of paying someone else’s mortgage? It feels like rent is money gone forever, while an EMI at least contributes to ownership over time. But with rising property prices, high interest rates, and added expenses like maintenance, insurance, and property tax, I’m unsure if buying is truly the smarter choice. I’d like to understand whether continuing to rent makes better financial sense in the current market or if taking a home loan and investing in property would be a more prudent long-term move.

Advice by Pankaj Gadgil, MD & CEO, Aditya Birla Housing Finance

It’s a dilemma most urban professionals face: should you continue paying rent month after month, or use that same amount to pay an EMI and move closer to owning a home? The logic of “why pay rent when you can pay EMI” is compelling, but the decision deserves careful consideration of financial readiness, lifestyle goals, and long-term benefits.

Rent, by nature, is an ongoing expense with no lasting returns. It provides utility—shelter—but not ownership. An EMI, however, changes the equation. Every instalment contributes to reducing your loan principal, thereby increasing your ownership in a tangible asset. Over time, you are not just paying for a roof, you’re building equity in a property that can appreciate in value.

Historically, real estate in India has appreciated steadily, especially in urban centers with infrastructure growth. This means your home loan not only buys you a home but also a potential wealth-building instrument. When you eventually sell or upgrade, the value appreciation can significantly enhance your net worth—something rent payments can never achieve.

Tax incentives and financial efficiency

Homeownership also comes with multiple tax benefits under the Income Tax Act. Section 80C allows deductions on the principal repayment of a home loan, while Section 24(b) provides deductions on interest payments up to Rs 2 lakh per year for self-occupied property. These benefits effectively reduce your overall tax burden, making EMIs financially more efficient than rent in the long run. Rent payments, except in certain cases for salaried individuals claiming HRA, offer limited tax relief and no wealth creation.

Beyond the numbers, owning a home brings emotional and lifestyle benefits—stability, a sense of belonging, and freedom to customize your space. Renters often face periodic hikes, shifting landlords, or sudden relocations, all of which can disrupt personal and financial planning. A homeowner, on the other hand, enjoys predictability in payments and complete autonomy over their living environment.

The balanced view

That said, buying a home should align with one’s broader financial plan. You must assess factors like job stability, emergency savings, and long-term mobility before committing to a home loan. Real estate is not just an investment—it’s a responsibility. But when approached prudently, redirecting rent toward an EMI can indeed transform an ongoing liability into a lasting, appreciating asset that contributes to both financial security and emotional fulfillment.

(Views expressed by the expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)