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Ramalingam Kalirajan |10870 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 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

Asked by Anonymous - Jul 10, 2025Hindi

Hello Sir, i am 35 year old. I am currently working and have salary of 2 lakhs/month . I gave 50 lakhs in MF , 9 lakhs in stocks ,7 lakhs in PPF, 12Lakghs in epf and 6 lakhs of FD . my current monthly expense in 45000 including rent. What should be the right time to buy a house of 1Cr.

Ans: – You have built a strong financial base by age 35.
– Rs 50 lakh in mutual funds is very impressive.
– You are earning Rs 2 lakh monthly with Rs 45,000 expenses only.
– This gives high surplus and good future flexibility.
– Let’s now assess when to buy a Rs 1 crore house.

» Understand Your House Buying Capacity
– You want to buy a Rs 1 crore house.
– Buying it fully with savings may affect long-term growth.
– A home loan can help bridge this gap.
– But home loan EMI must be affordable, not stressful.
– Ideal EMI is not more than 30–35% of income.
– In your case, that’s around Rs 60,000–70,000 monthly.

» Your Existing Investments Are Well Spread
– Rs 50 lakh in mutual funds offers good growth potential.
– Rs 9 lakh in stocks is high-risk. Monitor it carefully.
– Rs 7 lakh in PPF and Rs 12 lakh in EPF is long-term locked.
– Rs 6 lakh in FD gives safety and liquidity.
– You have all major categories well covered.
– That brings a good balance in your portfolio.

» Calculate Safe Down Payment First
– You need at least 20% down payment.
– For Rs 1 crore house, that is Rs 20 lakh minimum.
– But keeping Rs 25–30 lakh ready is safer.
– You can use part from FD and part from mutual funds.
– Don’t use full FD or full mutual fund for down payment.
– Keep Rs 5–6 lakh liquid even after down payment.

» Avoid Disturbing Long-Term Investments
– Mutual funds must grow for wealth creation.
– Don’t redeem full MF holdings for house.
– PPF and EPF should not be touched at all.
– They are for retirement and safety net.
– Only partial redemption of mutual funds is fine.
– Prefer redeeming from short-term debt mutual funds, if held.
– Avoid equity mutual fund redemption unless necessary.

» Understand Tax Impact Before Redeeming MFs
– Equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
– STCG is taxed at 20% flat.
– Debt mutual funds are taxed as per your income slab.
– A Certified Financial Planner can help minimise tax impact.
– Redeem smartly and over 2 financial years, if needed.

» Home Loan Must Not Disturb Other Goals
– A Rs 70,000 EMI is manageable for your income.
– You must still continue SIPs while paying EMI.
– Don’t stop investing for future goals like retirement.
– Check if loan tenure and EMI allows SIPs to continue.
– You are saving around Rs 1.5 lakh monthly now.
– That is enough to handle EMI and SIP both.
– Still, review exact cash flow once EMI starts.

» Right Time Is When Three Things Match
– You should buy when down payment is ready.
– You must have EMI surplus without stopping SIPs.
– You must be sure of staying in that location long-term.
– If all these match, that is your right time.
– Don’t rush only due to peer pressure or emotional pull.
– Also don’t wait endlessly expecting prices to fall.

» Avoid Buying House for Investment
– You can buy house for own use.
– But never buy a second house for investment.
– Real estate needs big money and gives low returns.
– It also lacks liquidity and has high maintenance.
– Mutual funds perform better long-term with flexibility and liquidity.

» Choose Location Based on Long-Term Plans
– Don't buy house just near office.
– Office may change, city may change.
– Buy only in a place where you will settle long-term.
– Otherwise, rent is better than buying.
– If not sure of location, delay buying.

» Keep Emergency Fund Ready Separately
– After buying house, liquidity becomes tight.
– So keep Rs 5–6 lakh as emergency fund.
– Don't use this for down payment or EMI.
– Keep it in sweep FD or short-term debt fund.
– It protects you if income is delayed or job is lost.

» Buy After Tracking Credit Score
– Your loan approval depends on CIBIL score.
– Track your credit report before applying.
– Keep score above 750 for better loan terms.
– Don’t apply with multiple banks at once.
– A Certified Financial Planner can guide better loan terms.

» Don’t Stop Equity Investing for House
– Equity investing builds your long-term wealth.
– SIPs should continue even after house EMI starts.
– Even if you reduce SIP slightly, don’t stop it.
– SIPs will help you later for kids’ education or retirement.
– Long-term compounding will build real wealth.

» Never Use PPF or EPF for Buying House
– PPF and EPF are for your retirement.
– These are tax-efficient and give safe returns.
– Withdrawing from them for house is not wise.
– That will hurt you later during retirement years.

» Direct Funds Are Not Recommended for House Goal
– Direct funds have no guidance or help during market falls.
– You may exit or switch wrongly under panic.
– Regular funds through MFD and Certified Financial Planner are safer.
– They review portfolio, help with tax planning, and goal realignment.
– For big goal like house, you need human guidance.

» Don’t Use ULIPs or Endowment Plans
– If you hold any ULIP or LIC endowment, review them.
– These give low returns and long lock-ins.
– If holding any, surrender and shift to mutual funds.
– That builds corpus faster and with flexibility.

» Delay Buying if Location or Job Is Not Stable
– If you expect job transfer, then delay the house.
– If city preference is not fixed, then wait.
– A house becomes a long-term commitment.
– Wrong location choice becomes very costly later.

» Consider Loan with Flexi-Repayment
– Some banks allow step-up or part pre-payment of loan.
– You can reduce interest by paying lump sums.
– Use bonuses or annual hikes to repay part of loan.
– That way your loan closes faster without pressure.
– Don’t use SIP amounts for this. Use only bonus or surplus.

» Maintain Good Ratio of Loan to Investment
– After taking home loan, your asset-to-loan ratio must stay healthy.
– Never let loan grow faster than your net worth.
– Review portfolio every 6 months after home loan.
– Make sure SIP, emergency fund and insurance are intact.
– House should not disturb your financial freedom.

» Get Proper Term Insurance Before Taking Loan
– Loan increases your liability.
– Take a term insurance of Rs 1 crore immediately.
– That protects your family from EMI burden.
– Don’t take insurance-linked to home loan from bank.
– Take separate term plan from own analysis.

» Finally
– You are financially ready for a house soon.
– Wait only if job location is not stable.
– Start preparing your down payment and documents now.
– Keep mutual funds growing alongside the loan.
– Review entire plan with a Certified Financial Planner yearly.
– Let the house be a lifestyle asset, not an emotional burden.
– If done right, it will give comfort and pride without hurting future goals.

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

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