Owning a home is a significant financial milestone for many individuals. Beyond providing shelter, a house often represents stability, security, and a sense of accomplishment. Whether the motivation is to start a family, avoid the uncertainties of rented accommodations, secure a property in a booming real estate market, or simply create a space that can be customised freely, the emotional and financial value of homeownership is undeniable.
However, the escalating property prices make purchasing a home outright a distant reality for most salaried individuals. Consequently, many resort to taking a home loan, while others contemplate building a corpus through disciplined investments. The question arises — which pathway leads to quicker and more efficient homeownership?
When purchasing a ₹1 crore home, individuals often make an initial down payment and finance the rest through a loan. Let us consider the case of a 30-year-old professional who has managed to save ₹15 lakh as a down payment.
Under these terms, the monthly EMI (Equated Monthly Instalment) would be approximately ₹67,173. Over a 30-year tenure, the borrower would pay:
Thus, the interest burden significantly surpasses the original loan amount, resulting in a total outlay more than double the cost of the house.
Alternatively, if the individual chose not to buy the home immediately but instead invested the equivalent EMI amount of ₹67,173 monthly through a Systematic Investment Plan (SIP) over the same 30-year period, the projections could be as follows. To get a personalised estimate of how much your SIP could grow over time, you can also try the Angel One SIP Calculator for a quick and easy calculation.
At the end of 30 years, the investment corpus would be:
The invested capital grows manifold, offering a sizeable corpus that far exceeds the ₹1 crore target for buying a home, even accounting for inflationary pressures.
Read More: Mutual Funds – Best Mutual Fund Investment 2025 Online India.
The comparison highlights two starkly different financial outcomes:
This divergence is mainly because of the power of compounding that long-term investments offer, compared to the cost of compounding that a long-duration loan imposes on borrowers.
The choice between taking a home loan and investing to build a corpus largely depends on personal priorities, financial circumstances, and risk appetite. While the numbers clearly demonstrate that investments, over the long term, can generate a much larger corpus, they also require discipline, patience, and resilience against market fluctuations. Conversely, home loans offer the advantage of immediate possession but come at a substantial cost due to interest payments over an extended period.
Ultimately, there is no singular ‘right’ path. Each option has its merits and challenges. A balanced approach, considering both emotional needs and financial prudence, is essential in making an informed decision that aligns with one’s long-term goals and lifestyle aspirations.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Apr 28, 2025, 3:31 PM IST
Team Angel One
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