How does the rent vs buy comparison work in Pakistan?

Buying costs are the upfront transfer taxes plus the lost investment return on your down payment, ongoing mortgage interest and holding costs, offset by the property's capital growth and the equity you build. Renting costs are the rent paid over the period, while your deposit stays invested and grows. The tool nets these out over your horizon.

Why is the default mortgage rate so high?

House-building finance in Pakistan, including Sharia-compliant Ijara and Diminishing Musharakah products, has historically carried rates around 18 to 24 percent per year, tracking the State Bank policy rate. The high cost of borrowing is a major reason renting can stay competitive for shorter holding periods.

What transfer taxes apply when buying property in Pakistan?

Buyers typically pay a mix of stamp duty, capital value tax and registration charges, which the tool bundles into a single transfer percentage defaulting to about 5 percent. Exact rates are set provincially and vary by city, property value and filer status.

Does property always appreciate enough to make buying win?

No. Buying tends to win over long horizons when capital growth is strong and you stay put long enough to absorb the high mortgage cost and upfront taxes. Short holding periods, weak growth, or high borrowing rates can make renting cheaper. The tool lets you test these assumptions directly.

Pakistan Rent vs Buy Calculator

Q: Are these results financial advice?

No. This is a simplified model for comparing scenarios. It ignores capital gains tax on sale, selling costs, and your personal tax position. Treat it as a starting point, not advice.

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A Pakistan rent vs buy calculator that compares the two paths over a horizon you choose — typically 10 years — so you can see which leaves you financially better off rather than guessing. It accounts for the thing most casual comparisons miss: the opportunity cost of your down payment, the return that money could earn if you rented and invested it instead.

How it works

The model nets out the real cost of each path over your horizon.

Buying costs:

upfront   = transfer taxes (stamp duty + CVT + registration) + the down payment
            (which stops earning investment returns)
ongoing   = mortgage interest + holding costs (maintenance, society dues, tax)
benefit   = capital growth on the property + equity built from repayments
netBuy    = upfront + ongoing - end equity (the deposit is recovered as equity)

Renting costs:

netRent   = total rent paid (growing with rent inflation)
            - investment growth earned on the deposit kept invested

Whichever net cost is lower is the cheaper path over that period. Because mortgage finance in Pakistan is expensive and transfer taxes are paid upfront, buying usually needs several years of solid capital growth to pull ahead — which is exactly what the horizon slider exposes.

Example and notes

Buy a Rs 15,000,000 home with a Rs 5,000,000 down payment at 20%, versus renting an equivalent home at Rs 60,000/month. With 8% capital growth, 7% rent inflation, 5% transfer taxes and a 12% return on invested savings, the comparison can swing either way depending on how long you stay.

This is a simplified comparison: it ignores capital gains tax on sale, selling costs and your tax position. Many Pakistani mortgages are Sharia-compliant, so the rate here is a proxy for the financing cost. All figures are computed locally in your browser and are not financial advice.