Home Loan vs Rent in Nepal: The Real Math
By the BP Tools team · 2026-08-21 · 5 min read
Every family gathering has this argument. Someone says rent is "throwing money away." Someone else mutters about their cousin's EMI eating half a salary. Both sides sound certain, and neither has done the math — because the math is genuinely annoying to do by hand.
So let's do it properly, with real numbers, for one concrete scenario. Not to declare a universal winner — there isn't one — but to show you exactly how to run the numbers for your situation. Every figure below comes from the same formulas our EMI, mortgage and SIP calculators use, so you can rerun the whole thing with your own numbers in about five minutes.
The scenario
Say you're looking at a flat priced at Rs 1 crore. The bank will finance part of it, and you put down Rs 30 lakh from savings. That leaves a Rs 70 lakh loan — say your bank quotes 11% for 20 years. (Rates move around; use whatever your bank actually offers when you rerun this.) The same kind of flat rents for about Rs 30,000 a month in the same area.
Same flat, two paths. Twenty years. Who ends up ahead?
Path one: buy it
A Rs 70 lakh loan at 11% over 20 years means an EMI of Rs 72,253 every month. Here's the part that makes people put down their tea: over those 240 payments you'll hand the bank about Rs 1.73 crore — the 70 lakh you borrowed, plus Rs 1.03 crore in interest. The interest is bigger than the loan. That's not your bank being cruel; that's just what 11% over twenty years does, quietly, one month at a time.
Tenure is the lever most people never touch. The same loan over 15 years pushes the EMI to Rs 79,562 — about Rs 7,300 more per month — but cuts total interest to Rs 73 lakh. Reading that again: an extra Rs 7,300 a month saves you about Rs 30 lakh. If the shorter EMI fits your budget with room to breathe, it's one of the best trades in personal finance.
What does the buyer own at the end? If property values grow 5% a year, the Rs 1 crore flat is worth about Rs 2.65 crore after 20 years — owned outright, no rent ever again. Along the way there's also maintenance, insurance and repairs; even a modest 0.5% of the property's value per year adds up to Rs 16 lakh or so over the period. Owners tend to forget this line. Roofs don't.
Path two: rent it, invest the difference
This is the path nobody's uncle defends at the gathering, so let's give it a fair run. The renter keeps the Rs 30 lakh down payment invested, pays Rs 30,000 rent, and — this is the discipline that makes or breaks the strategy — invests the difference between the would-be EMI and the rent, every single month.
Rent doesn't stay put, though. Give it a realistic 5% annual increase and it roughly climbs from Rs 30,000 to about Rs 75,800 by year 20 — which means the investable difference shrinks every year. Over two decades our renter pays about Rs 1.19 crore in rent and manages to invest around Rs 55 lakh of monthly differences on top of the original 30.
If those investments earn 10% a year, the renter finishes with a portfolio of about Rs 4.49 crore. More than the flat's Rs 2.65 crore — quite a lot more. Case closed for renting?
Not so fast — watch the assumptions flip the answer
Change two dials and the story reverses. If the renter's investments earn 8% instead of 10%, the portfolio lands near Rs 3.18 crore. If the property appreciates at 7% instead of 5% — not unusual for good locations in growing cities — the flat is worth about Rs 3.87 crore, and the owner is now ahead, while still holding a home and paying no rent for the rest of their life. Nudge both dials at once and the gap swings by more than a crore in either direction.
That's the honest heart of the buy-vs-rent question: it's a bet on two growth rates — your investments versus your city's property — plus one brutally underrated factor: whether you'd truly invest the difference every month for twenty years, or whether it would quietly become a better motorbike. The EMI is forced discipline; a SIP is chosen discipline. Be honest with yourself about which one you'll actually keep.
The things the spreadsheet can't hold
Some real considerations never make it into the formula. Owning means stability — nobody can ask you to vacate the year your child starts school — and in Nepal, land and a home carry a weight of security and family standing that a brokerage statement doesn't. Renting means flexibility: you can follow a job to another city, or another country, without finding a buyer first. Owning concentrates your wealth in one asset on one street; investing spreads it. And an EMI at the edge of your income is a twenty-year source of stress that no appreciation rate compensates.
Run your own numbers in five minutes
- Take the real price, your real down payment and your bank's quoted rate to the mortgage calculator — it shows the EMI, total interest, and what taxes and maintenance add per month.
- Rerun it at 15 and 20 years in the EMI calculator and look at the total-interest difference. That number alone changes minds.
- Put your down payment plus the monthly difference into the SIP calculator at a return you actually believe in — try a modest one too.
- Compare the two endings, then weigh the unquantifiable parts: stability, flexibility, family, stress.
There's no universal answer — but there is your answer, and it takes five minutes of honest arithmetic to find it. That's five minutes that can settle a family argument, or at least upgrade it to one with real numbers in it.
These are worked examples for learning the method, not financial advice — rates, prices and returns in your case will differ, and big decisions deserve a conversation with someone qualified who knows your full picture.
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