Don’t Get Stuck Renting Your “Dream”: Buy Smart and Build Wealth!

While taking a home loan, Ever feel like you’re pouring money into rent, but never truly owning your place? There’s a smarter way! Here’s how to buy your dream home strategically and achieve financial freedom:

**Step 1: ** Calculate Rental Yield (What It Is & How to Do It):

Rental yield shows the annual return you’d get on a property as rent compared to its purchase price. Here’s the formula:

(Annual Rent) / (Property Value) x 100

Step 2: Analyze & Strategize:

  • Rental Yield < 6%: Renting might be wiser!
    • Invest the difference between rent and a potential EMI in a Systematic Investment Plan (SIP).
    • Over time, this could build substantial wealth for a future cash purchase.


  • Property cost: ₹1 Crore
  • Down payment: ₹25 Lakhs
  • Loan: ₹75 Lakhs (EMI ≈ ₹67,500 for20years)
  • Monthly Rent: < ₹30,000

Action: Rent & Invest!

  • Invest the ₹37,500 saved (EMI – Rent) in an STEP-UP SIP & 25Lakh lumpsum.
  • In 10 years, with potential growth, you could have a significant corpus along with your initial down payment to buy the house outright!

SIP Investment:

  1. Initial SIP amount: ₹ 37,500
  2. Investment period: 10 years
  3. Annual SIP increment: 10%

Lumpsum Investment:

  1. Investment amount: ₹ 25,00,000 (25 lakh)

Amount after 10 years:

14,840,322 /- from SIP and 10,000,000 from lumpsum

House rate after 10 years at 7% inflation:

Even after purchasing the house you will left with 4,840,322/-

Now you had to pay the EMI for 20 years in this case you have left 10 more years
now you don’t have to pay the rent, if you continue the remaining investment and continue the SIP
after 10 more years you’ll end up with around 4 crore.

Conclusion: In 20 years you’ll have the house and a retirement corpus and in addition you’ll be debt free. While if you go for the loan you’ll end up with the house only.

Remember: Owning a property comes with maintenance costs (not factored in rent), but renting frees you from those worries. That is why I didn’t consider rent increments every year.

Step 3: High Rental Yield (>6%)? Invest Smartly!

  • Invest a 1portion of your EMI (e.g., 10%) in an SIP with a 10% annual increase.
  • Over time, this could build a corpus alongside your homeownership!

Which in this case is 6700/month step up SIP
you’ll be having around 2 crore after 20 years

The Key: Making informed choices! Plan strategically to achieve your dream home AND financial security.

The Author

Vaid IQ

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