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₹3.5 lakh monthly income, but ₹1.3 lakh EMI: Why a Mumbai couple paused ₹1.7 crore home purchase
Mumbai real estate: A couple with annual income of ₹42 lakh paused buying a ₹1.7 cr home after learning that monthly EMI would go up to 30%-40% of their income
Wridhayan Bhatt and his wife, Ankita, were close to booking a ₹1.7 crore 2-BHK apartment in Mumbai’s suburbs last weekend, but eventually put the purchase on hold after assessing the financial burden. The couple had negotiated the price down to around ₹1.5 crore with the developer’s sales team, but a closer look at the numbers made them reconsider the deal.
The couple visited the project on August 15, when the developer was quoting around ₹1.7 crore for the apartment. They offered about ₹1.5 crore, but the developer did not agree to the price. With around ₹30 lakh available as equity, a significant portion would go towards stamp duty, registration and other transaction-related expenses, leaving them with a potential home-loan requirement of around ₹1.4–1.5 crore.
At prevailing home-loan interest rates, such a loan could result in a monthly EMI of roughly ₹1.1 lakh– ₹1.3 lakh, depending on the final loan amount, interest rate, and tenure. That would amount to around 30%-40% of the couple’s combined monthly income.
"We both earn ₹3.5 lakh every month. That would mean committing a significant portion of our income to the house before accounting for maintenance, utilities, insurance, transportation, food, investments and other expenses," Bhatt said.
The couple also spends around ₹5 lakh a year on their five-year-old son’s education and extracurricular activities. "Despite what appears to be a relatively high household income by urban standards, the size of the down payment and the resulting loan obligation made the purchase financially uncomfortable for us. By Sunday evening, we decided to put the purchase on hold," he said.
"We will look at saving more corpus before proceeding, despite knowing that prices may rise by then, but we want to ensure our monthly EMI does not exceed ₹80,000. Considering the current global macroeconomic situation and the job losses happening, I feel it will be wiser to have minimal credit liabilities in case the sea gets choppy after a year or so," Bhatt said.
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How the couple’s home loan numbers stack up
Bhatt was considering buying a 2-BHK home for which he and his wife would have needed a home loan of around ₹1.5 crore. Assuming an interest rate of 7%-7.5% and a 20-year repayment tenure, the loan would have resulted in an estimated monthly EMI of ₹1.16 lakh- ₹ 1.21 lakh. With their combined annual income of around ₹42 lakh, or ₹3.5 lakh a month, the proposed home loan would have consumed roughly one-third of their monthly income.
What experts suggest?
According to real estate consultants, while EMI commitments of 40%-60% of household income are increasingly common, the right home-financing strategy ultimately depends on an individual’s financial goals, expenses and household dynamics.
"At the end of the day, managing home financing comes down to individual financial goals, although market realities often influence the strategy. It is increasingly common to see homebuyers opt for 100% financing or commit 40%, 50% or even 60% of their income towards EMIs. This is particularly common among dual-income households, where one partner may take responsibility for the household’s day-to-day expenses while the other services the home loan," said Pravin Shah, a Mumbai-based real estate consultant.
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Shah said waiting to build a larger equity corpus before buying may not always work in a rising property market. "Rising real estate prices can offset the benefit of additional savings. Even if interest rates fall or household incomes rise, the overall cost of the purchase may remain high due to property appreciation. In some cases, buying earlier may make more financial sense, as property prices could rise further even if borrowing costs subsequently decline," he said.
