Recently, I interacted with a young couple who had taken a large housing loan. They sought my opinion on two possible approaches:
- Opting for a long tenure with a lower EMI and investing the surplus in mutual fund SIPs, or
- Increasing the EMI to repay the housing loan as early as possible.
Our analysis took a slightly different view. We were not very comfortable with the idea of younger individuals taking on large housing loans early in their careers. The initial focus at this stage of life should ideally be on career growth, financial flexibility, and skill enhancement, not long-term liabilities.
It’s important to understand that one requires shelter, not necessarily ownership. A large housing loan at a young age ties up personal finances, reduces mobility, and adds financial stress. Loan repayments are certain, while equity returns, job security, and income growth are uncertain. Moreover, under the new tax regime, there is little benefit from home loan interest payments.
If a housing loan is still to be taken, the strategy should be to repay it as quickly as possible — increase EMIs where feasible and channel bonuses or additional income toward loan reduction in the early years. Investments can always follow once financial stability is achieved.
A home is primarily a consumption asset, often purchased for emotional satisfaction. For practical shelter needs, renting remains a more flexible and cost-effective alternative, especially in the early stages of one’s career.
Naveen Julian Rego – CFP®
MD & Principal Officer
Date: 25-10-2025
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