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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 21, 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

Asked by Anonymous - Jul 19, 2025Hindi

I am earning 1 LPA a month planing to buy a home range 60-70LPA. Saving 5LPA as FD there is no other saving apart. May be next year nursery of kid will start. Can you please suggest how to save money and buy a home within next 5-6 month.

Ans: You are earning Rs 1 lakh per month. You save Rs 5 lakh annually in fixed deposit. You are planning to buy a house of Rs 60 to 70 lakh within 5 to 6 months. Your child may also start nursery soon. Let’s create a plan that supports your home purchase and also builds financial stability.

? Understanding the Big Picture

– You want to buy a house in 5–6 months.
– Budget is Rs 60 to 70 lakh.
– You have no other savings except Rs 5 lakh FD.
– Monthly salary is Rs 1 lakh.
– Expenses will increase when nursery starts.
– So your cash flow must be planned carefully.
– Home loan is required in this case.
– Own contribution also needs to be arranged soon.

? Importance of Margin Money

– Banks usually fund 75% to 80% of property value.
– You need to pay 20% to 25% as down payment.
– For Rs 60 lakh home, Rs 12–15 lakh is your share.
– For Rs 70 lakh home, your share becomes Rs 14–17.5 lakh.
– This amount must come from your savings.
– Your current FD is Rs 5 lakh only.
– So you still need Rs 7–10 lakh more for the purchase.

? Action Plan to Arrange Own Contribution

– You have 5–6 months.
– Save at least Rs 40,000–45,000 monthly from salary.
– That gives Rs 2.4 to Rs 2.7 lakh in 6 months.
– Combine that with Rs 5 lakh FD.
– You may still need Rs 2–4 lakh more.
– Ask if any family support is available.
– Or liquidate non-core assets if available.
– Or choose a smaller flat in Rs 55–60 lakh range.
– That reduces your margin money burden.

? Prepare for Home Loan Eligibility

– Lenders check income, age and repayment capacity.
– Rs 1 lakh salary can support loan of Rs 40–50 lakh.
– Loan tenure of 20 years may be suitable.
– EMI should not cross 40% of your salary.
– That is around Rs 40,000 monthly.
– Choose a bank offering low interest and high eligibility.
– Keep credit score above 750 for better deal.
– Avoid new loans or credit card defaults now.
– Prepare all salary slips, IT returns and bank statements.

? Managing Expenses Before and After Purchase

– Create a detailed monthly budget.
– Include child education, groceries, utilities and EMIs.
– Keep Rs 10,000–15,000 buffer monthly for emergencies.
– Don’t stretch loan beyond your comfort.
– If EMI is too high, you may miss other goals.
– Nursery fees may increase over time.
– Plan for rising child expenses also.
– Avoid taking any car loan or consumer loan now.

? Emergency Fund is a Must

– Don’t use all money for house down payment.
– Keep minimum Rs 1.5–2 lakh in separate FD.
– This is for medical or job-related emergencies.
– House buying can bring sudden expenses.
– Having a backup gives peace of mind.

? What You Must Avoid

– Don’t buy a bigger house just for status.
– Don’t take maximum possible loan just because bank offers it.
– Don’t buy under-construction properties with uncertain timelines.
– Don’t borrow money from unregulated sources.
– Don’t delay child education savings for house EMI.
– Don’t ignore EMI insurance or home insurance.
– Don’t keep entire down payment in equity or risky funds.

? Ideal Property Selection Strategy

– Look for ready-to-move homes.
– Choose a reputed builder or resale in developed area.
– Location should have access to school and hospital.
– Property should have clear legal documents.
– Home loan process becomes smoother with clean title.
– Try to choose a property below Rs 60 lakh if possible.
– That helps reduce loan EMI pressure.
– A lower EMI will leave room for other goals.

? After Home Purchase – Start Other Investments

– Buying a house is just the beginning.
– You must start saving for your child’s school and college.
– Start SIP in child-focused mutual funds after house buying.
– Use actively managed funds, not index funds.
– Index funds don’t protect from market crash.
– Child education goal needs better control on risk.
– Start with small SIPs of Rs 2,000–3,000 per child.
– Increase SIP once your salary grows.

? Use Actively Managed Mutual Funds for Future

– Avoid direct funds unless you’re an expert.
– Regular plans via trusted MFD with CFP give better support.
– They track goals, adjust portfolio and provide advice.
– Direct funds miss this benefit.
– You may get stuck or exit at wrong time.
– Active mutual funds with regular guidance protect your goal.
– Always go with Certified Financial Planner’s advice.

? Home Loan Repayment Plan

– Try to pay extra towards principal every year.
– Even Rs 50,000–Rs 1 lakh extra reduces years of loan.
– Whenever you get bonus or hike, prepay 5% loan amount.
– Don’t extend the loan for 25–30 years.
– Keep tenure short to reduce total interest.
– But don’t overburden monthly EMI.
– Balance is important.

? Life and Health Cover

– Before buying a house, check your insurance.
– If something happens, EMI burden should not fall on family.
– Take a pure term insurance of Rs 50–75 lakh minimum.
– Premium is low if taken early.
– Also buy family health insurance if not covered.
– Medical emergency can ruin your EMI discipline.
– Protect your house and family together.

? Involving Spouse in Financial Planning

– Your spouse takes care of current expenses.
– After EMI starts, both incomes will be needed.
– Discuss financial goals together.
– Keep joint plan for expenses and savings.
– Joint home loan also improves loan eligibility.
– Register property in both names if possible.

? Tax Benefits from Home Loan

– You can claim Rs 1.5 lakh on principal repayment under Section 80C.
– You can also claim Rs 2 lakh interest deduction under Section 24(b).
– This gives tax savings every year.
– Keep all loan and payment proofs safe.
– Use savings for children’s future goals.

? Final Steps Before Purchase

– Finalise the builder or seller after checking property documents.
– Apply for loan only after site is confirmed.
– Pay token advance only after agreement.
– Use cheque or digital payment for record.
– Register the property properly after loan approval.
– Keep separate file for all papers, loan sanction and EMI details.

? Finally

– You are already saving and planning responsibly.
– Try to reduce house cost slightly to make things easy.
– Use current FD and save aggressively next 6 months.
– Don’t compromise emergency fund or child needs.
– Keep home loan EMI within 40% of salary.
– Start child education SIP once EMI begins.
– Use actively managed mutual funds through CFP-guided MFD.
– Avoid index funds, direct funds, and risky advice.
– With proper steps, you can buy your home peacefully.
– Plan next goals only after settling this properly.

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

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