Nowadays, buying one’s own house is almost every person’s dream, but many times, to fulfill this dream, people take a home loan that is more than their earnings. This decision may seem right in the beginning, but later paying heavy EMI (monthly installment) every month can become a cause of financial trouble.
Experts say that home loan EMI should not be more than 25% to 30% of your monthly income. If the EMI exceeds this, it may become difficult for you to save, invest and meet your future financial needs.
How much should be the EMI?
Suppose your monthly earning is Rs 1 lakh. In such a situation, your EMI should be around Rs 25,000. Maximum it can be kept up to Rs 30,000. If your EMI exceeds this, your monthly budget may get spoiled. Similarly, if your monthly income is Rs 75,000, then it would be better to keep the EMI around Rs 18,750. Whereas a maximum EMI of up to Rs 22,500 is considered acceptable. If your income is Rs 50,000 per month, then it would be better to keep the EMI around Rs 12,500. If needed, it can be kept up to a maximum of Rs 15,000.
not enough money for expenses
Experts say that while taking a home loan, many people only pay attention to how big a loan the bank is ready to give them, but do not think about how much EMI they will be able to comfortably pay every month. This mistake later causes financial stress. If a large part of your income goes into paying EMIs every month, you will not have enough money left for savings, investments, medical emergencies, children’s education, retirement planning and other important expenses.
Keep these expenses in mind too
Apart from this, while buying a house, people often pay attention only to EMI, whereas there are many other expenses besides this. These include expenses like registration fee, stamp duty, property tax, maintenance charge, home insurance, furniture and interior. Therefore, it is important to calculate all these expenses before buying a house.
How can you reduce the burden of EMI?
- Make more down payment while buying a house.
- Choose a house according to your needs and income.
- If necessary, you can extend the loan tenure a little, so that the EMI gets reduced.
- Before taking a home loan, definitely consult a financial advisor.
Remember, buying a house is a big decision in life. Therefore, choose such a home loan whose EMI you can easily pay for a long time without any stress. A properly planned home loan gives you financial security, whereas excessive EMI can limit your financial freedom.
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