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Delhi Dad, 38: My 50L Home Loan. Now or Save More?
Ramalingam Kalirajan |9758 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on Jun 02, 2025
Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - May 17, 2025Hindi
Hi sir, i am 38 year old living in delhi in a rented house, i am into business and i earn approx 1.5 lac per month, my wife is not working and have two girls 4 years and 9 years. One auto loan is going on with emi of 13 k since jan 23 and remaining for 19 more months. Started sip from last year for 8 thousand every month,in total 1.3 lac in mutual funds and i have equity of approx 6.5 lac in bluechip companies. I have kept emergency fund of 2 lac in cash, 5 lac in my and my wife bank account each. My monthly expense is around 1 lac excluding emi. I have a health insurance for entire family with cover of 10lac and a top up policy of one crore. My question is, i want to buy a home should i go for home loan of 50 lac with down payment of approx 8 lac or should i wait to collect more corpus before taking a home loan and how can i maximise returns and increase savings?
Ans: You are on the right track in many ways. But buying a house with a Rs 50 lakh home loan now may not be your best financial decision. Let's assess your situation and goals from a 360-degree view.
?
Monthly Cash Flow and Savings Strength
Your income is Rs 1.5 lakh per month.
?
Your current expense is Rs 1 lakh per month.
?
Auto loan EMI is Rs 13,000. That’s a long-term liability till mid-2026.
?
Your effective savings are about Rs 37,000 monthly, if we include EMI as a fixed outgoing.
?
This savings rate is just around 25% of your income.
?
Ideally, you should save at least 35% to 40% of income at this stage.
?
You have Rs 1.3 lakh in mutual funds through SIPs. That’s a good beginning.
?
You also have Rs 6.5 lakh in equities. This adds to your long-term wealth pool.
?
Emergency fund is well managed — Rs 2 lakh in cash and Rs 10 lakh in bank savings.
?
But too much idle money in savings account gives low return.
?
You can restructure some of this idle amount for higher growth.
?
Health insurance is well set — Rs 10 lakh + Rs 1 crore top-up. Very thoughtful decision.
?
Home Loan Decision — Evaluate Carefully
You plan to take a Rs 50 lakh loan with Rs 8 lakh down payment.
?
That means property value may be around Rs 58 lakh or more.
?
EMI on Rs 50 lakh loan for 20 years may be approx Rs 45,000 to Rs 48,000 monthly.
?
This EMI is 30%+ of your monthly income.
?
Adding EMI to your current expense of Rs 1 lakh will take total outgo above Rs 1.45 lakh.
?
That leaves little room for savings, emergencies, or business volatility.
?
Your business income may fluctuate. Loan EMI remains fixed.
?
That can cause cash flow strain in any weak business month.
?
You will also have to manage property maintenance, taxes, and house setup costs.
?
After buying the house, your liquidity will be tight.
?
You will have very limited flexibility to grow business, invest, or manage kid’s goals.
?
Therefore, taking a big loan now is not suitable.
?
Recommended Path — Strengthen First, Then Buy
Hold the house purchase for now. Build more financial strength first.
?
Target at least Rs 20 lakh in financial corpus before buying house.
?
That will make the down payment easier and lower the loan requirement.
?
Smaller loan means lower EMI. That keeps your cash flow balanced.
?
Focus more on building mutual funds portfolio over next 3-4 years.
?
Increase your SIP gradually every 6 months. Even Rs 1,000 to Rs 2,000 increase matters.
?
Keep mutual fund investments via regular plans through a Certified Financial Planner.
?
A planner will guide based on your goals and risk.
?
Avoid direct mutual fund route. You will miss professional advice and tracking.
?
Regular plans via planner offer better long-term discipline and help in market cycles.
?
Also avoid index funds. They are passive and do not beat inflation over long periods.
?
Actively managed funds offer better returns with risk-adjusted strategies.
?
Choose diversified equity funds across flexi cap, mid cap, and hybrid for balance.
?
Review the equity stocks you already hold. Avoid overexposure to one sector.
?
If these stocks are idle or underperforming, shift them to mutual funds gradually.
?
Use your wife’s savings as well to build long-term assets.
?
Joint SIPs or funds in her name can help reduce tax in future.
?
Kids’ Education — Start Dedicated Planning Now
Your daughters are 4 and 9 years old. Time is on your side.
?
School and college costs will rise sharply due to inflation.
?
Plan Rs 25 to 30 lakh for each child over next 10 to 15 years.
?
Begin a separate SIP for children’s education.
?
Start with Rs 5,000 monthly. Increase every year with income.
?
Keep this in a growth-oriented fund with child-specific goal.
?
Keep insurance separate from investments. Don’t mix them.
?
Avoid child ULIPs or education endowment policies.
?
For safety, consider taking a term plan of Rs 1 crore for yourself.
?
Term insurance is cheap and gives peace of mind.
?
Emergency Fund — Optimise Returns
You have Rs 2 lakh in cash and Rs 10 lakh in bank savings.
?
That is excess idle balance in savings account.
?
Move at least Rs 6 lakh to a short-term debt mutual fund or arbitrage fund.
?
This gives better return than savings bank interest.
?
Keep Rs 2 lakh in cash and Rs 4 lakh in bank savings for any urgent needs.
?
Debt funds offer liquidity and 5-6% returns post-tax.
?
This strategy keeps your emergency fund safe and productive.
?
Business Goals — Don’t Ignore Capital Needs
You are self-employed. Business stability affects entire family.
?
Set aside at least Rs 3 lakh to 5 lakh as business contingency buffer.
?
This buffer helps you manage cash cycles, bulk orders, or temporary slowdowns.
?
Use a liquid fund or sweep account for this buffer.
?
Don’t touch this for personal needs or investments.
?
As your business grows, increase this buffer proportionately.
?
Review business income, cash flows, and margins every quarter.
?
If income becomes stable, then only think of buying property with clarity.
?
Real Estate — Don’t Rush
Avoid pressure to buy house just because rent is going out.
?
Rent is a known cost. EMI is a fixed liability.
?
House purchase brings big responsibilities like maintenance, tax, and low liquidity.
?
If you move house or city due to business, house becomes a burden.
?
Instead, grow your financial net worth. That gives better freedom.
?
You can always buy a house 3-4 years later with less loan.
?
That also gives you better bargaining power.
?
Monthly Budget Review — Create Savings Habit
Review expenses monthly with your wife.
?
Track wasteful spends. Avoid lifestyle creep.
?
Try to bring expenses below Rs 90,000 per month.
?
Save the extra in SIPs and emergency buffer.
?
Discuss financial goals openly with your spouse. Involve her in small investment steps.
?
Make goal chart for house, kids, and retirement.
?
This brings alignment and motivation.
?
Final Insights
Don’t buy house now. Strengthen financials first.
?
Maintain SIP discipline. Gradually increase monthly SIP.
?
Build Rs 20 lakh corpus in next 3-4 years.
?
Only then take smaller home loan for balance amount.
?
Don’t break equity or MF holdings to buy house.
?
Use Certified Financial Planner to design full plan for family goals.
?
Avoid direct funds, index funds, or mix insurance products.
?
Separate insurance, investment, and emergency funds clearly.
?
Use wife’s savings also to build joint future.
?
Invest with goal-based planning, not just product-based decision.
?
Stay patient and consistent. You will achieve house and kids goals peacefully.
?
Best Regards,
?
K. Ramalingam, MBA, CFP,
?
Chief Financial Planner,
?
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
?
Monthly Cash Flow and Savings Strength
Your income is Rs 1.5 lakh per month.
?
Your current expense is Rs 1 lakh per month.
?
Auto loan EMI is Rs 13,000. That’s a long-term liability till mid-2026.
?
Your effective savings are about Rs 37,000 monthly, if we include EMI as a fixed outgoing.
?
This savings rate is just around 25% of your income.
?
Ideally, you should save at least 35% to 40% of income at this stage.
?
You have Rs 1.3 lakh in mutual funds through SIPs. That’s a good beginning.
?
You also have Rs 6.5 lakh in equities. This adds to your long-term wealth pool.
?
Emergency fund is well managed — Rs 2 lakh in cash and Rs 10 lakh in bank savings.
?
But too much idle money in savings account gives low return.
?
You can restructure some of this idle amount for higher growth.
?
Health insurance is well set — Rs 10 lakh + Rs 1 crore top-up. Very thoughtful decision.
?
Home Loan Decision — Evaluate Carefully
You plan to take a Rs 50 lakh loan with Rs 8 lakh down payment.
?
That means property value may be around Rs 58 lakh or more.
?
EMI on Rs 50 lakh loan for 20 years may be approx Rs 45,000 to Rs 48,000 monthly.
?
This EMI is 30%+ of your monthly income.
?
Adding EMI to your current expense of Rs 1 lakh will take total outgo above Rs 1.45 lakh.
?
That leaves little room for savings, emergencies, or business volatility.
?
Your business income may fluctuate. Loan EMI remains fixed.
?
That can cause cash flow strain in any weak business month.
?
You will also have to manage property maintenance, taxes, and house setup costs.
?
After buying the house, your liquidity will be tight.
?
You will have very limited flexibility to grow business, invest, or manage kid’s goals.
?
Therefore, taking a big loan now is not suitable.
?
Recommended Path — Strengthen First, Then Buy
Hold the house purchase for now. Build more financial strength first.
?
Target at least Rs 20 lakh in financial corpus before buying house.
?
That will make the down payment easier and lower the loan requirement.
?
Smaller loan means lower EMI. That keeps your cash flow balanced.
?
Focus more on building mutual funds portfolio over next 3-4 years.
?
Increase your SIP gradually every 6 months. Even Rs 1,000 to Rs 2,000 increase matters.
?
Keep mutual fund investments via regular plans through a Certified Financial Planner.
?
A planner will guide based on your goals and risk.
?
Avoid direct mutual fund route. You will miss professional advice and tracking.
?
Regular plans via planner offer better long-term discipline and help in market cycles.
?
Also avoid index funds. They are passive and do not beat inflation over long periods.
?
Actively managed funds offer better returns with risk-adjusted strategies.
?
Choose diversified equity funds across flexi cap, mid cap, and hybrid for balance.
?
Review the equity stocks you already hold. Avoid overexposure to one sector.
?
If these stocks are idle or underperforming, shift them to mutual funds gradually.
?
Use your wife’s savings as well to build long-term assets.
?
Joint SIPs or funds in her name can help reduce tax in future.
?
Kids’ Education — Start Dedicated Planning Now
Your daughters are 4 and 9 years old. Time is on your side.
?
School and college costs will rise sharply due to inflation.
?
Plan Rs 25 to 30 lakh for each child over next 10 to 15 years.
?
Begin a separate SIP for children’s education.
?
Start with Rs 5,000 monthly. Increase every year with income.
?
Keep this in a growth-oriented fund with child-specific goal.
?
Keep insurance separate from investments. Don’t mix them.
?
Avoid child ULIPs or education endowment policies.
?
For safety, consider taking a term plan of Rs 1 crore for yourself.
?
Term insurance is cheap and gives peace of mind.
?
Emergency Fund — Optimise Returns
You have Rs 2 lakh in cash and Rs 10 lakh in bank savings.
?
That is excess idle balance in savings account.
?
Move at least Rs 6 lakh to a short-term debt mutual fund or arbitrage fund.
?
This gives better return than savings bank interest.
?
Keep Rs 2 lakh in cash and Rs 4 lakh in bank savings for any urgent needs.
?
Debt funds offer liquidity and 5-6% returns post-tax.
?
This strategy keeps your emergency fund safe and productive.
?
Business Goals — Don’t Ignore Capital Needs
You are self-employed. Business stability affects entire family.
?
Set aside at least Rs 3 lakh to 5 lakh as business contingency buffer.
?
This buffer helps you manage cash cycles, bulk orders, or temporary slowdowns.
?
Use a liquid fund or sweep account for this buffer.
?
Don’t touch this for personal needs or investments.
?
As your business grows, increase this buffer proportionately.
?
Review business income, cash flows, and margins every quarter.
?
If income becomes stable, then only think of buying property with clarity.
?
Real Estate — Don’t Rush
Avoid pressure to buy house just because rent is going out.
?
Rent is a known cost. EMI is a fixed liability.
?
House purchase brings big responsibilities like maintenance, tax, and low liquidity.
?
If you move house or city due to business, house becomes a burden.
?
Instead, grow your financial net worth. That gives better freedom.
?
You can always buy a house 3-4 years later with less loan.
?
That also gives you better bargaining power.
?
Monthly Budget Review — Create Savings Habit
Review expenses monthly with your wife.
?
Track wasteful spends. Avoid lifestyle creep.
?
Try to bring expenses below Rs 90,000 per month.
?
Save the extra in SIPs and emergency buffer.
?
Discuss financial goals openly with your spouse. Involve her in small investment steps.
?
Make goal chart for house, kids, and retirement.
?
This brings alignment and motivation.
?
Final Insights
Don’t buy house now. Strengthen financials first.
?
Maintain SIP discipline. Gradually increase monthly SIP.
?
Build Rs 20 lakh corpus in next 3-4 years.
?
Only then take smaller home loan for balance amount.
?
Don’t break equity or MF holdings to buy house.
?
Use Certified Financial Planner to design full plan for family goals.
?
Avoid direct funds, index funds, or mix insurance products.
?
Separate insurance, investment, and emergency funds clearly.
?
Use wife’s savings also to build joint future.
?
Invest with goal-based planning, not just product-based decision.
?
Stay patient and consistent. You will achieve house and kids goals peacefully.
?
Best Regards,
?
K. Ramalingam, MBA, CFP,
?
Chief Financial Planner,
?
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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