Home Loan EMIs: A Personal Journey and its Implications
Introduction to Home Loan EMIs
Choosing to purchase a home is a significant milestone for many individuals and families. The monthly Equated Monthly Installment (EMI) plays a crucial role in this decision, often determining the feasibility of the purchase. In this article, we explore the journey of two individuals, Archana Sharma and her experiences, and also share insights from an early homeowner who faced similar challenges in the 1990s.
Archana Sharma's Experience
Archana Sharma shares her experience of entering into a home loan in 2016, purchasing a flat for 45,000 INR per month, with 56% of her total take-home salary allocated towards the EMI. While this may seem like a considerable amount, she discusses how their financial situation has improved over the years, allowing them to meet their EMI payments and even pay off their home loan relatively quickly, with only 26% of their current take-home salary now allocated to the EMI.
Financial Evolution Over Time
The couple faced ups and downs, but gradually, they secured better opportunities and saw an increase in their salaries. Archana emphasizes that the decision to own their home was crucial, bringing a sense of stability and happiness to their lives.
Early Home Ownership in the 1990s
Reflecting on the past, an early homeowner recounts his experience of purchasing a 3-BHK apartment in 1991 for around 7.25 lakhs INR, including additional costs such as electricity, water connections, and other expenses. He took a 15-year loan from HDFC, which initially amounted to 90,000 INR. After several negotiations and guarantees, the loan amount was eventually raised to 140,000 INR. His take-home salary at that time was around 3,400 INR, making the EMI a significant 38.25% of his net pay.
Challenges and Adjustments
The homeowner mentions facing considerable financial strain, especially during the initial months when the apartment was not ready and he had to pay both the EMI and rent. For five months, he was paying a combined amount of 2,742 INR, which was a substantial portion of his take-home salary. This situation was further exacerbated by his wife's inability to travel due to her work, leading to financial hardships.
Comparative Analysis: Past vs. Present
A comment from another individual took the discussion a step further, questioning the relevance of the past examples in light of the changing economic landscape. The homeowner counters by arguing that the core issue of affordability remains constant, even as incomes and property prices have increased. He points out that today, a 30-year-old may earn around 10-12 lakhs INR per annum, but a 3-BHK flat of similar size would still be unaffordable without significant financial support.
Conclusion
The journey of home ownership is complex and varies greatly based on individual circumstances. While financial realities have changed over the decades, the challenge of meeting home loan EMIs continues to be a significant factor. As the housing market evolves, it is crucial for individuals to carefully consider their financial capacity and future plans before embarking on the path to homeownership.
Frequently Asked Questions
What percentage of salary is considered suitable for a home loan EMI?
Financial experts generally recommend that the home loan EMI should not exceed 40% of your take-home salary. However, this can vary based on individual financial situations and local market conditions.
How can one manage home loan EMIs during financial hardships?
Managing home loan EMIs during financial hardships can be challenging. Consider seeking advice from financial advisors, exploring options like loan restructuring or refinancing, and maintaining a strict budget to ensure timely EMI payments.
How has the housing market changed in the last few decades?
The housing market has seen significant changes, including increased property prices and broader supply. Factors such as urbanization, changing lifestyle preferences, and improved infrastructure have all influenced the demand and affordability of homes in various cities.