Home Loans vs. Renting: A Financial Comparison

Overview

Frequently Asked Questions

Rental yield is the annual rent collected from a property divided by the total value of the property, expressed as a percentage. In India, it is around 2-3%.
Yes, you can claim both HRA tax exemption for rent and home loan tax deductions if you live in a rented house while owning a self-occupied property in another city.
These are government taxes charged during property transfers, usually adding 5% to 8% to the property value depending on the state.
Pre-EMI is the interest charged by the bank on the disbursed loan amount before construction is complete. It does not reduce your loan principal.
Real estate can be profitable, but it is highly illiquid, has high entry costs, and historically has given lower returns (5-7%) compared to equity (12%) in India.
In India, banks can fund up to 80% of the property value, meaning a minimum 20% down payment must be arranged by the borrower.
LTV stands for Loan-to-Value. It is the ratio of the loan amount to the appraised value of the property, used by banks to assess risk.
Floating rates are usually better because fixed-rate home loans come with a premium charge and are rarely fixed for the entire 20-year term.
It is paying off extra parts of your loan principal early. This directly reduces your interest burden and shortens your loan tenure.
If you default on three consecutive EMIs, the bank will issue warnings. Under the SARFAESI Act, the bank can auction your property to recover the outstanding loan.

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