Buying a first home remains a significant financial milestone for many Indian families, with evolving strategies. According to Jatul Anand, Executive Director at PNB Housing Finance, a practical starting point is setting an affordability limit.
An effective guideline is the ‘five-times annual income’ rule. An ideal scenario is where the property value does not exceed five times the household’s yearly income to avoid excessive financial strain later, especially in a rising interest rate environment.
Moreover, the headline price of a property is just one aspect of the overall cost. Anand emphasized that additional expenses like registration charges, stamp duty, GST for under-construction properties, basic interiors, maintenance deposits, and insurance typically contribute another 8–10% to the total expenditure.
To prevent falling into the EMI trap, Anand cautioned against over-leveraging. While financial institutions may offer higher loan amounts based on income, he advised keeping the monthly EMI within 40–45% of the total monthly income to maintain financial flexibility. Utilizing structured repayment options like step-up EMIs or part-prepayments can help manage cash flows effectively.
Government schemes such as PMAY-U 2.0 and tax deductions under Sections 80C, 24(b), and 80EEA continue to support first-time homebuyers. Anand highlighted how these incentives, along with more inclusive lending practices, make homeownership more accessible, especially for individuals without an extensive credit history.
The debate between renting and buying, particularly in costly metro areas, remains complex. While renting provides flexibility, it does not contribute to wealth creation compared to owning a home, which can build long-term assets if affordability and future plans align.
An increasing trend in Tier 2 and Tier 3 cities involves more families opting for self-construction due to relatively affordable land prices and improving infrastructure, making self-built homes a viable pathway to ownership.
As the festive season boosts home loan activities, Anand emphasized the importance of focusing on fundamentals over temporary discounts. Maintaining a healthy credit score and stable income is crucial for securing the best loan rates.
Innovations in the loan process, such as digital integration from application to disbursement at PNB Housing Finance, aim to streamline operations while ensuring speed and risk mitigation. Service transparency, regular updates, and personalized assistance are central to enhancing the overall customer experience.
Anand concluded that informed decision-making is key during the festive season, urging families to seek guidance from qualified financial advisors before making any home-buying or loan decisions.