Wealthfront : Tools

This calculator will help you decide whether you should buy a home or rent it.

Of course owning a home is the biggest Indian dream, but the objective factors involved are as follows (we've taken into account 25 parameters in all!):

- your horizon for living in the home
- cost of the property and the rent you're currently paying
- amount of the upfront money and the future monthly payments you can afford
- your city, marginal tax bracket and the salary & its composition (Basic, DA, HRA, etc.)
- margin money required by the lender, maximum tenure of the loan, prepayment charges, processing fee, interest rate and the reducing balance frequency
- property tax, stamp duty and the brokerage
- maintenance cost and society charges
- expected appreciation of the property price and your opportunity cost
- expected increase in your salary and rent and inflation.

The implicit assumptions are

The interest on loan is 13% p.a.

The maximum loan period is 20 years

The reducing balance is calculated on monthly reset

The minimum down payment required is 20% of the price

The reducing balance is calculated monthly

Your marginal tax bracket is 33%

Loan administration and processing fee is 2% of the loan value

The stamp duty and broker's fee come out to be 13% of the property price

Property tax on property is Rs. 1500 per year

The house you want to buy will appreciate every year by 10%

Prepayment charges for loan are 2%

The monthly society charges are Rs. 1000

Annual maintainance costs are Rs. 10000

Opportunity cost is 12%

Annual increase in salary is 15%

The annual increase in rent is 10%

Inflation rate is 6%

Interest on loan		%
Min margin money the lender requires		%
Maximum tenure of loan		years
Reducing balance
Marginal tax bracket		%
Processing and other fees as percentage of loan		%
Stamp duty and broker's charges as percentage of property price		%
Property tax (Rs.)
Expected appreciation in property price		% p.a.
Prepayment penalty on loan		%
Monthly society charges (new house) (Rs.)
Annual maintenance costs (new house) (Rs.)
Nature of city	Metro	Non Metro
Increase in salary every year		%
Increase in rent every year		%
Opportunity cost of investment		% p.a.
Inflation		%

Buying a house appears to be a better decision
You should take a loan for	years
Monthly repayments before tax adjustment	Rs.
Monthly repayments after adjusting for tax benefits	Rs.
By buying a house you would save	Rs.
You can sell the house at the end of the period for	Rs.
The capital gains tax on selling the house	Rs.
Your total tax savings on interest would come out to	Rs.

Sorry! You may need to revise your investment plan.
The monthly repayments should be at least Rs.	Rs.
Over a period of	years.

The numbers favour renting a house. However, we're sure you'd find a way to reduce the cost of owning a home, after fiddling some more with this tool!.
By renting the house you can save	Rs..
The total rent that you'd pay	Rs.
However, in case you are interested in buying a house, here are the costs:
You should take a loan for	years
Monthly repayments before tax adjustment.	Rs.
Monthly repayments after adjusting for tax benefits	Rs.
You can sell the house at the end of the period for	Rs.
The capital gains tax on selling the house	Rs.
Your total tax savings on interest would be	Rs.