Buying a home was always a dream for us—as it is for many middle-class families. But the idea of taking a home loan felt overwhelming.
If you’re planning to take your first home loan, or have just started paying EMIs, this post is for you.
1. We Didn’t Stretch Our Budget Too Thin
The bank was ready to offer us a higher loan amount, but we decided to borrow less than we were eligible for. That gave us some breathing room. We chose a flat that met our needs, not our status.
Tip: Always plan EMIs so that your monthly EMI is 35–40% of your take-home income, not more.
2. We Picked a Bank with a Reasonable Interest Rate
As of mid-2025, home loan interest rates are around 7.5% to 9.5% depending on the bank and your credit score. We compared offers from 3-4 banks before choosing one. Also, we checked if there were any hidden charges or penalties for prepayment.
What helped us: A good credit score (above 750) gave us slightly better rates.
3. We Built a Safety Cushion before Taking the Loan
Before starting the EMI, we made sure we had at least 3–6 months of emergency savings. This made us feel secure—if anything unexpected happens (like a job loss or medical emergency), we can still keep up with the EMI.
Lesson: Never start a big loan without some backup funds.
4. We Keep Track of Every Rupee Now
After starting the EMI, we became more disciplined with our spending. No more random online shopping or weekend splurges. We started using a basic Excel sheet to track:
• Monthly income
• Fixed expenses (like EMI, groceries, school fees)
• Flexible spending (eating out, travel, etc.)
Outcome: We’re still living well, just more consciously.
5. We Plan to Make Small Prepayments Every Year
We aren’t rushing to close the loan, but we do plan to make small prepayments every year—especially when we get bonuses or tax refunds. Even ₹50,000–₹1 lakh a year can reduce the interest burden significantly over time.
Why it matters: Prepaying in the first 5–7 years has the biggest impact on reducing total interest.
6. We Took a Home Loan with a Joint Account
Both I and my spouse are co-applicants. It helped us get higher loan eligibility and also split the EMI load mentally. Plus, we both get income tax benefits under Sections 80C and 24(b).
7. We Remind Ourselves: It’s Not Just a Loan, its Our Home
Yes, it’s a long commitment. Yes, some months are tight. But at the end of the day, we’re paying for something that’s ours. That thought makes it easier to stay focused and disciplined.
8. We Started a Small Mutual Fund SIP to Help Prepay the Loan
Alongside managing EMIs, we recently began a small monthly SIP (Systematic Investment Plan) in a mutual fund. The goal isn’t just wealth creation—it’s to build a lump sum that we can use to part-prepay our home loan in the next 5–7 years.
We’re not investing a huge amount just ₹2,000 to ₹3,000 a month in a balanced or index mutual fund. But over time, with compounding, it adds up.
Why this works:
Instead of using all your savings to prepay suddenly, you can grow a fund on the side that earns better returns than your savings account. Then, every few years, use that to make a big prepayment, which reduces both your loan tenure and total interest.
It’s a small step, but it gives us confidence and a plan to eventually be debt-free—before the 20-year term ends.
Final Thoughts
If you’re planning your first home loan, don’t rush. Do your research, plan your finances, and take a loan that fits your life—not just your bank’s calculations.
And remember, you can enjoy the journey—even with an EMI. Just be smart, stay grounded, and don’t let the loan control your lifestyle.
Even if your EMI is manageable, planning a way to prepay your home loan early can save you lakhs in interest. You don’t need big amounts just the discipline to start small and stay consistent. Your future self will thank you.