I am 34 and my husband is 36. We have a girl child of 7 years old. We work in corporate and together we make approximately 2.75L per month.
Below are our assets:
1. Flat worth 20L to 30L
2. Plot worth 40L
3. Plot worth 90L ( currently in loan of 75L)
4. Gold of 400gms
5. SGB of 2.5L in 2020
6. MF in SIP of approx 55k/month since last two years
7. Few stocks of 5L
8. Emergency fund of 20L
Here's my question,
My EmI goes around 131000 ( 7 years loan of 75L). We are saving on MF. Rest goes on expenses and little left out every month. We have a plan of constructing home+rental in the plot which is on loan now. This may approximately cost us 1.5crore I assume in 2.5 years.
Can you please guide us the best way to achieve this with minimal loan while construction. Because I thought of changing loan emi to 30 years and save extra money for construction. however my husband prefers 7 years emi and top up while construction.
Need a guidance on this.
Thank you.
Ans: Family’s Financial Background
– You both are salaried and earn Rs. 2.75L monthly.
– You have a daughter aged 7.
– You hold multiple assets across real estate, gold, mutual funds, and equity.
– Current EMI is Rs. 1.31L monthly on a Rs. 75L loan.
– Your EMI takes almost 48% of income.
– Your SIPs are Rs. 55K/month, which is well-disciplined.
– Emergency fund of Rs. 20L adds strength.
Your financial habits are very solid.
The mix of real assets, liquid funds, and regular savings is well-planned.
Your challenge now is:
how to build a Rs. 1.5 crore house with less loan
how to balance your current cash flow
Let’s work through this with clear planning.
Real Estate Assets Evaluation
– You own a flat worth Rs. 20–30L.
– You own a plot worth Rs. 40L (no loan).
– Another plot worth Rs. 90L has Rs. 75L loan outstanding.
– If the flat is not self-occupied or generating rent, it’s just an idle asset.
– Consider renting it out if not already done.
– That rent can offset a small part of future home construction EMI.
– The plot with Rs. 75L loan is where you plan to build the house.
– Total cost of construction is expected to be Rs. 1.5 crore in 2.5 years.
Now your goal is to avoid large top-up or second loan.
So let’s create surplus for that.
EMIs vs. Loan Tenure Strategy
– Current EMI is Rs. 1.31L for 7-year tenure.
– This is putting strain on your monthly budget.
– Your plan is to either:
Convert EMI to 30 years and save cash
Or continue 7 years and do top-up later
Let’s evaluate both routes:
Route A – Extend tenure to 30 years
– EMI will reduce drastically to around Rs. 45–50K.
– You will free up around Rs. 80K monthly.
– Over 30 months, that can create Rs. 24L savings.
– This money can be part-used for construction.
– But total interest paid over 30 years becomes very high.
– You can always prepay later and reduce tenure.
Route B – Stick to 7-year EMI and top-up later
– EMI remains Rs. 1.31L.
– Surplus will remain tight, hard to save for construction.
– Top-up later adds more interest burden on future.
– This option delays construction start.
– Will increase dependency on external loan at higher rate.
Better choice is to combine both approaches smartly.
Do tenure restructuring now.
Then save aggressively for construction over 2.5 years.
Later, use minimal top-up only if needed.
Monthly Cash Flow After EMI Restructuring
– Assume EMI revised to Rs. 50K.
– You now save Rs. 80K from EMI.
– Continue Rs. 55K SIP.
– This leaves you approx Rs. 25K extra monthly.
– Park this Rs. 25K in short-duration debt funds or RDs.
– Over 2.5 years, you can accumulate Rs. 7–8L.
– Also consider reducing SIP slightly for 30 months.
– Bring SIP down from Rs. 55K to Rs. 40K temporarily.
– That frees another Rs. 15K per month.
– Total monthly savings now = Rs. 25K + Rs. 15K = Rs. 40K.
– Over 2.5 years, you can save Rs. 12L+ for construction.
– Combine this with Rs. 20L emergency corpus if needed.
– But keep at least Rs. 10L untouched as pure emergency.
Construction Budget of Rs. 1.5 Crore – Planning Sources
– Total requirement in 2.5 years = Rs. 1.5 crore.
– Assume 3 stages of payout:
Foundation: Rs. 50L
Structure and finishing: Rs. 50L
Final fitting, interiors and overheads: Rs. 50L
Probable source mix you can aim:
– Rs. 12–15L from savings (as explained above)
– Rs. 5–10L from stocks + partial SGB maturity (if held till 2028)
– Rs. 10–15L from gold, if ready to part with some
– Balance Rs. 1–1.1 crore via fresh construction loan or top-up
– Try to build in phases and link payouts to stages.
– Use contractor agreements with stage-wise delivery and payment.
Evaluate Property Usage: Flat and Plot
– Flat value is Rs. 20–30L.
– If not emotionally attached, consider selling.
– Use proceeds to fund home construction.
– You reduce fresh loan burden by 20–30L.
– Or, if flat is rented, keep it as passive income source.
– Check if flat sale attracts LTCG tax.
– If gains are used to buy/construct house, tax is exempt.
– Avoid using plot worth Rs. 40L for loan pledge.
– Keep it clean as future safety net.
Your Mutual Fund SIPs Are Well-Structured
– SIP of Rs. 55K monthly since 2 years is excellent.
– You are creating future corpus for child and retirement.
– But during construction phase, reduce SIPs moderately.
– Ensure you resume original SIPs once construction is done.
– Do not stop completely.
– Equity SIPs help beat inflation in long-term.
– Review SIPs once a year.
– Focus on active funds only.
– Index funds do not offer strategy or protection during market fall.
– Regular funds with help from Certified Financial Planner are better.
– Avoid direct funds unless you can monitor and rebalance regularly.
– Regular funds through MFD gives support and discipline.
Protecting Future Goals – Child and Retirement
– You have a 7-year-old daughter.
– Education expenses will begin in 10 years.
– Create separate SIP folio for her education goal.
– Start small but increase SIP yearly.
– Use mix of large-cap and flexi-cap equity funds.
– Avoid aggressive small-cap for this goal.
– Sukanya Samriddhi Scheme can be a good safe option.
– For retirement, aim to restart VPF or NPS contributions later.
– Let SIP build retirement corpus in equity over 20 years.
– After 50 years of age, slowly move to hybrid funds.
Insurance Protection Check
– Ensure term insurance for both of you.
– Coverage should be minimum 15–20 times annual income.
– Health insurance should be Rs. 15–20L per person.
– Don't rely on employer cover only.
– Review existing insurance, if any.
– Avoid endowment or ULIP policies.
– If you have them, surrender and redirect to SIPs.
Tax Planning Consideration
– Home loan interest and principal gives tax benefit under sections 80C and 24.
– Construction loan also eligible once certificate obtained.
– SGB interest is taxable annually.
– Capital gains from gold, property and mutual funds attract different tax rules.
– Equity mutual fund LTCG above Rs. 1.25L taxed at 12.5%.
– STCG taxed at 20%.
– Debt mutual fund gains are taxed as per income slab.
– Plan redemptions keeping tax thresholds in mind.
Final Insights
– Keep EMI affordable by extending tenure.
– This frees cash for future construction.
– Reduce SIP for 2–3 years to boost construction fund.
– Sell or lease idle flat if it helps reduce loan burden.
– Keep Rs. 10L emergency fund untouched.
– Don’t touch education corpus for construction.
– Split construction cost into phases to reduce pressure.
– Resume normal SIPs after construction is over.
– Avoid overexposure to loans to protect future stability.
– Review goals and investments every year with help from a Certified Financial Planner.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Suresh on Jun 27, 2025Hindi
