40-Year Married Man in Bangalore Seeks Financial Advice: 2.1 Cr Flat Purchase with 1.5 Cr Loan - How to Manage?

Hi , I am 40 years married and have one child residing in Bangalore. I have 30 lakh in PPF , 32 lakh in PF and 15 Lakh in MF and around 40 Lakh in Shares. A flat in different city of value around 60 lakh I have two emi for total 67000 per month running for next 3 years. Rent is 35k per month. Income around 3 lakh per month. I am planning to buy flat , 2.1 cr taking loan 1.5 cr for 20 years. Remaining 60 lakh as personal financing for flat purchase with income for next 2 years. Please advise what I can do to manage my finance and build corpus for saving as well

Ans: Hello;

Your monthly expenses:
Current EMIs: 67000
New EMI: ~133000
Rent: 35000
Household expenses:~ 50000
Total monthly Expense: 285000
Total monthly Income:~ 300000

You have hardly any income left for investments.

If I would have been in your place, I would have settled earlier loans before venturing into a new home loan, using part of the savings.

Also I would have sold the flat in other city and used the sale proceeds towards down payment of new house purchase.

This will ensure that my current investments remain mostly untouched(except loan prepayment).

I get exemption from long term capital gain arising from sale of old flat since reinvested into new residence(As per provisions of ITax Act).

My EMI burden will be much lesser and I can invest aggressively in mutual funds and NPS for:
1. Kid higher education &
2. Retirement

This was my perspective.

You may have different approach but key is to ensure reasonable amount of debt so that you have disposable income left for investments towards
future goals.

Happy Investing;
X: @mars_invest

Asked on - Jan 23, 2025 | Answered on Jan 23, 2025

Which of the below savings I should break for prepayment of loan - 20 lakh. MF , PF , PPF Can you please advise ?

Ans: Hello;

You should retain MF, PF and PPF.

Sell the direct stocks you own. Their is a reason why I am recommending you to do this, hope you get it.

Best wishes;
X: @mars_invest

Ans: You’ve shown great discipline in managing savings, family needs, and future goals at just 30.

Let us evaluate your financial readiness, the impact of a home loan, and how to adjust wisely.

This assessment will guide you from all angles—cash flow, liquidity, investment health, and protection.

Income, Expenses, and Monthly Surplus
In-hand income after tax is Rs 1.08 lakh.

Monthly rent is Rs 12,000.

Household expenses are Rs 18,000.

Mutual fund SIPs are Rs 18,000.

LIC premium is Rs 4,000.

Chit fund contribution is Rs 17,000.

Sukanya Samriddhi deposit is Rs 3,500.

Liquid savings for daughter is Rs 10,000.

These monthly outflows total around Rs 82,500.

Your monthly balance is only around Rs 25,000.

This makes your budget tight for handling any large EMI.

Mutual Fund SIPs — Continue with Discipline
Rs 18,000 SIP shows excellent saving behaviour.

Current mutual fund corpus is Rs 2.16 lakh.

Please continue these SIPs through regular plans via MFD with CFP support.

Avoid direct mutual funds. They give no handholding, no alerts, no correction strategies.

Direct plans look cheap, but they lack timely guidance.

Investors panic during market falls and exit direct plans wrongly.

Regular plans help you stay invested with a CFP guiding your risk.

Avoid index funds too. They follow market passively and offer no downside protection.

Index funds underperform when markets fall or stay flat.

Actively managed mutual funds are better with professional decision-making.

They adjust sector exposure based on economy and risk cycles.

Stocks and Equity Exposure
You have Rs 1.38 lakh in stocks.

This is a good experience builder.

However, limit direct equity exposure to 10% of total assets.

Stock markets need time and research.

Let mutual funds handle most of your equity investment.

Emergency Fund Is Too Low
You currently have Rs 20,000 as emergency corpus.

This is insufficient for a family with a child.

Target at least Rs 1.5–2 lakh as safety reserve.

Use a liquid fund or short-term debt fund to build this.

Emergency fund protects you from job loss, health issue or delay in income.

RD Corpus — Use it Wisely
RD balance of Rs 1.3 lakh is decent for short-term goal.

It’s not suitable for long-term growth.

Use it partially for your house down payment.

Once RD matures, allocate half to mutual funds and half to emergency fund.

Sukanya Samriddhi Account
Rs 3,500 monthly is being contributed.

Accumulated corpus is Rs 44,000.

Good long-term step, but SSY is illiquid till 18 years.

Returns are also fixed and not inflation-adjusted fully.

Don’t increase investment here. Continue as is.

Better to put fresh long-term savings in equity mutual funds.

Liquid Savings for Child Education
You save Rs 10,000 monthly for daughter’s education.

You’re doing great with that intention.

But liquid savings may give only 3–4% returns.

Shift this to a hybrid equity mutual fund.

It gives better growth with moderate risk.

As your daughter grows, this corpus can support quality education.

Chit Fund Contribution
Rs 17,000 monthly for 20 months is ongoing.

9 months are completed.

On maturity, you’ll receive around Rs 4 lakh.

Chits are risky, unregulated, and lack transparency.

You can use this Rs 4 lakh as part of your down payment.

After maturity, avoid rejoining any new chit.

Mutual funds are safer, flexible and goal-oriented.

LIC Policy — Reconsider and Reallocate
You pay Rs 4,000 monthly towards LIC.

5 years completed, 11 more years remain.

Annual premium is Rs 45,000.

This is most likely an investment-cum-insurance plan.

Such policies offer poor returns, usually less than 5%.

Surrender now and reinvest in mutual funds.

Take a pure term plan separately for life cover.

LIC traditional plans lock your money and give low value at maturity.

Buying a Flat Next Year — Readiness Check
Buying a home is emotional, but let’s stay financial while assessing it.

Down Payment Readiness
You need to fund around 20% of flat price + registration.

Flat worth Rs 40 lakh needs Rs 8–10 lakh upfront.

Your chit fund will give Rs 4 lakh.

RD + mutual fund corpus adds Rs 3.5 lakh.

You’ll still need Rs 2–3 lakh more.

Start saving Rs 20,000 monthly for next 10 months.

EMI Capacity and Loan Readiness
With Rs 25,000 surplus monthly, you can afford Rs 20,000 EMI.

But this removes your safety cushion.

During initial loan years, reduce SIPs to Rs 10,000.

Post 2–3 years, increase it again once comfortable.

Maintain emergency fund before committing EMI.

Don't rely on LIC maturity or chit reinvestment to manage EMI.

Loan Tenure Planning
Don’t stretch loan beyond 15–20 years.

Longer loans increase total interest outgo.

Choose fixed or reducing interest options.

Check foreclosure charges, if any.

Prefer prepayment after emergency fund is strong.

Term Insurance and Health Cover
You didn’t mention life insurance apart from LIC.

Please take term insurance of at least Rs 1 crore.

This protects your child and spouse financially.

Also, take a family floater health cover of Rs 10 lakh.

Medical emergencies should not eat into your savings.

Realigning Financial Flow
Let’s adjust current strategy for better results:

Surrender LIC, save Rs 4,000 monthly.

Stop chit fund after maturity, save Rs 17,000 monthly.

Build emergency corpus, save Rs 1.5 lakh over next 6–8 months.

Protect yourself with term and health cover.

Shift liquid savings and RD maturity to hybrid/equity mutual funds.

Continue SSY but don’t increase investment in it.

Pause SIP temporarily if loan starts, but restart in 2 years.

Capital Gains Tax Rules for Mutual Funds
If you redeem mutual funds for flat purchase, be aware:

Long-term equity gains above Rs 1.25 lakh taxed at 12.5%.

Short-term equity gains taxed at 20%.

Debt mutual funds are taxed as per your income slab.

Plan redemptions in a staggered manner.

Avoid sudden bulk withdrawals from mutual funds.

Steps for Next 12 Months
Take these steps now to be ready for next year:

Build Rs 2 lakh in emergency fund.

Save Rs 2–3 lakh more for down payment.

Close chit and redirect that amount to mutual funds.

Take term insurance immediately.

Take family health insurance.

Don’t buy new policies from LIC or any other insurer.

Avoid any new direct stock investments.

Continue mutual funds through MFD and CFP-guided regular plans.

Final Insights
You have good savings habits and long-term thinking.

Your expenses are controlled. You’re focused on family security and stability.

But current savings are too scattered. Efficiency is low due to illiquid and underperforming products.

Avoid chit funds, LIC, and liquid-only strategies. Shift to structured mutual fund investments.

Protect your family with insurance before taking any home loan.

Buying a flat is possible next year if you plan now.

You need 6–8 months of focused savings and safety net.

With proper support from a Certified Financial Planner, your journey will stay smooth.

Please don’t choose index funds or direct mutual funds. They are riskier without expert support.

Stick with actively managed regular mutual funds. Let a CFP track and guide every goal.

This ensures peace of mind, even after the EMI starts.

Build your plan, not just your flat.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You are 35, earning Rs 1.6 lakh monthly. You hold strong investments. You live with your wife and a 1-year-old son. Your wife also earns Rs 80,000 monthly. You plan to buy a flat in Bangalore worth around Rs 1 crore.

Let’s go step-by-step to plan this smartly.

? Current Asset Assessment

– You have Rs 70 lakh in mutual funds.
– Rs 18 lakh is parked in fixed deposits.
– You hold Rs 40 lakh worth of ESOPs.
– NPS is at Rs 11 lakh.
– EPF savings stand at Rs 13 lakh.
– You also have Rs 10 lakh in direct stocks.
– SGB worth Rs 6 lakh is part of your assets.
– Others total Rs 5 lakh.

Your total financial net worth is above Rs 1.7 crore. This is a solid base at age 35.

? Monthly Investment Pattern

– You invest Rs 25,000 regularly.
– Any month-end surplus is also invested.
– Your wife contributes Rs 5,000 monthly.
– She has good savings in gold as well.

You are disciplined. That’s excellent. You’re building long-term wealth quietly.

? Debt Status and Cash Flow

– You have no EMIs now.
– That gives you high monthly liquidity.
– Both you and your spouse are earning.

This gives flexibility in planning a property purchase. Your financial strength is good.

? Property Purchase Budgeting

– You want to buy a flat for self-use.
– Your budget is around Rs 1 crore.

That is a reasonable figure. With your current net worth, it is feasible.

But the question is how you should fund this home without disturbing long-term wealth.

Let’s explore that part.

? Using Your FD for Property

– You have Rs 18 lakh in fixed deposits.
– These are safe, but give low returns.
– You can use Rs 10–12 lakh from here.
– Keep Rs 6–8 lakh as liquidity buffer.

That takes care of part down payment. Use only partial FD. Don’t empty this corpus.

? Using Mutual Funds for Purchase

– You have Rs 70 lakh in mutual funds.
– This is your wealth creation engine.

Avoid touching mutual funds meant for long-term goals like retirement, child’s future or financial independence.

If some portion is parked for short-term, then use that only. Otherwise, avoid redeeming equity funds.

Equity mutual funds work best when untouched for 10+ years. Use only non-core funds if you must.

Also, remember taxation:
– Equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
– STCG is taxed at 20%.

Avoid redeeming large amounts from mutual funds in one shot. Split redemption across financial years if possible.

? Using ESOPs for Home Buying

– You hold Rs 40 lakh in ESOPs.
– ESOPs are linked to your employer’s stock.
– That means they carry concentration risk.

You should gradually reduce ESOP exposure. Diversify into mutual funds.

You can consider selling some ESOPs to raise property funds. This is better than redeeming mutual funds.

But don’t rush. Check for tax impact. Coordinate selling with a CFP or MFD to reduce tax load.

Also, check if ESOPs are vested, liquid and tradable easily.

Use part of this for home purchase. Retain some for future value gain.

? Using SGB, EPF, NPS, Stocks

– Don’t redeem SGB now. Gold works as a hedge.
– EPF and NPS are for retirement. Don’t touch these.
– Direct stocks are only Rs 10 lakh. Avoid using them unless market is high.

Use only liquid and low-return assets for home buying. Never use long-term retirement assets.

? Ideal Funding Strategy

Let’s break this into a simple plan:

– Use Rs 10–12 lakh from FD.
– Use Rs 10–15 lakh from ESOPs.
– Add Rs 3–5 lakh from any liquid mutual funds.
– Remaining Rs 70 lakh can be home loan.

You get tax benefits on home loan interest and principal. You also maintain investments.

You can prepay loan slowly using bonuses or surpluses later.

? Monthly Affordability of EMI

– With Rs 1.6 lakh income and no EMI,
– You can easily handle Rs 35,000 to Rs 45,000 EMI.
– This is less than 30% of your income.

Even if your wife’s income is not counted, your EMI comfort is high.

So home loan is manageable and strategic.

? Emergency Fund Position

– Keep at least Rs 8–10 lakh as emergency fund.
– Use FD or liquid mutual funds for this.
– Never put emergency fund into real estate.

Emergency money protects you from job loss, medical shock or market correction.

Don’t weaken this for down payment.

? Wife’s Financial Role

– Your wife earns Rs 80,000 monthly.
– She also saves and invests.

She can take part ownership of the flat. That improves loan eligibility and tax planning.

Let her contribute to EMI or home expenses. It increases joint accountability.

Also, ask her to slowly increase monthly investment from Rs 5,000 to Rs 10,000 or more.

She has potential to grow her own corpus.

? Child’s Future Planning

– Your son is 1 year old.
– Plan for his school, college, and higher education.

Use separate mutual fund SIPs tagged to these goals. Don’t mix with property planning.

Avoid touching those funds for flat or loan.

Long-term child goals should grow untouched for 15–20 years.

? Insurance Cover for Protection

– You are planning a big home investment.
– Make sure you have proper term insurance.
– Cover should be minimum 15–20 times your annual income.

If your income is Rs 20 lakh/year, get at least Rs 3–4 crore term cover.

Same for health insurance. Cover whole family adequately.

This ensures your family is protected in worst-case scenarios.

? Regular Plan vs Direct Plan Review

– You likely invest in a mix of plans.
– If some are direct plans, do check performance.

Direct plans give no advice or support. You carry all risk alone.

Regular plans through CFP or MFD give guidance, review, and correction support.

When doing large decisions like property purchase, advice from a CFP-backed MFD becomes very useful.

So keep major goals aligned with regular plan route.

? Real Estate Is Not an Investment

– You are buying a flat to stay. That is fine.
– But don’t treat real estate as an investment.

Real estate has hidden costs. There’s low liquidity. Long holding periods. Legal risks.

Also, returns are low after factoring taxes, interest, and maintenance.

So don’t add more property for investment.

Focus instead on growing mutual fund corpus via SIP.

? Finally

– Your financial base is strong.
– Buying your own home is possible now.
– Use fixed deposits and ESOPs wisely.
– Take a home loan for the rest.
– Don’t touch long-term assets like EPF, NPS or core mutual funds.
– Keep emergency fund untouched.
– Plan EMIs carefully. Prepay slowly.
– Protect with insurance.
– Keep growing mutual fund SIPs.
– Don’t depend on real estate for wealth creation.
– Review your financial plan each year with a CFP.
– Avoid direct plans if you need support or review.
– Guide your wife to increase monthly investment.
– Start dedicated SIPs for child’s education and future.

This is how you buy a house and continue building wealth.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment