{"id":8195,"date":"2026-10-19T13:10:21","date_gmt":"2026-10-19T07:40:21","guid":{"rendered":"https:\/\/1finance.co.in\/1f-dashboard\/?post_type=blog&p=8195"},"modified":"2026-10-19T13:10:22","modified_gmt":"2026-10-19T07:40:22","slug":"emi-affordable-wrong-test-buying-flat","status":"publish","type":"blog","link":"https:\/\/1finance.co.in\/1f-dashboard\/blog\/emi-affordable-wrong-test-buying-flat\/","title":{"rendered":"Why ‘the EMI is affordable’ is the wrong test for buying a flat"},"content":{"rendered":"

Most home-buying decisions in India come down to 1 question: can we afford the EMI? Banks ask it, and so do most families. 2 cases from 1 Finance’s 2026 research report on the value of personalised financial advice show why that question is not enough.<\/p>\n

In the first, a Mumbai family could comfortably afford the EMI on a \u20b92.2 crore flat, and buying it would still have put 4 of their 5 goals at risk. In the second, a Bengaluru family had built a \u20b95.85 crore property portfolio and had no liquid way to fund \u20b93 crore of goals due within 8 years. Names and some details have been changed.<\/p>\n

Case 1: the flat that could wait until 2030<\/h2>\n

Farid earns \u20b977 lakh a year and Sameera runs the household. With a net worth of \u20b91.90 crore, they held 77 mutual fund schemes, 4 LIC policies and 3 properties in 2 cities, and had 5 goals ahead. They had all but decided on a \u20b92.2 crore flat in Mumbai.<\/p>\n

By the usual test, the flat looked affordable:<\/p>\n\n\n\n\n\n\n\n
The usual test<\/th>\nFigure<\/th>\n<\/tr>\n<\/thead>\n
EMI a month<\/td>\n\u20b91,02,000<\/td>\n<\/tr>\n
Current rent a month<\/td>\n\u20b975,000<\/td>\n<\/tr>\n
EMI as a share of Farid’s income<\/td>\nAbout 16%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

An EMI at 16% of income is well inside any bank’s comfort zone, and only \u20b927,000 a month more than the rent they were already paying. The advisor looked past the EMI:<\/p>\n\n\n\n\n\n\n\n\n
The test that mattered<\/th>\nFigure<\/th>\n<\/tr>\n<\/thead>\n
Cash needed upfront, on top of a \u20b91 crore loan<\/td>\n\u20b91.2 crore<\/td>\n<\/tr>\n
Everything the family had invested<\/td>\n\u20b91.19 crore<\/td>\n<\/tr>\n
Chance of funding retirement if they bought<\/td>\n58%<\/td>\n<\/tr>\n
Family goals put at risk<\/td>\n4 of 5<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Buying would have used up more than the family’s entire invested portfolio. The goals depending on that money, retirement among them, would have had to start again from zero while the EMI ran.<\/p>\n

The advice was to wait until 2030, and the report says the harder work was helping them accept it. Alongside, 77 schemes became 6 goal-mapped funds, the expense ratio fell from 1.75% to 0.74%, and the endowment policies were surrendered and moved to equity.<\/p>\n

The report values the advice at 317 basis points of net worth a year before fees, the highest of the 4 households it studied, with 169 basis points from behavioural coaching alone. Against a fee of about \u20b930,000, that is roughly \u20b96 lakh of value in the year, 20 times the fee.<\/p>\n

Case 2: the real estate fortress that left retirement unfunded<\/h2>\n

Raghu, a cloud architect, earns \u20b995 lakh a year; Divya runs the household. Their net worth is \u20b98.88 crore. Over 20 years they had bought 6 properties in Bengaluru, each of which made sense at the time: property felt solid and equity felt risky.<\/p>\n\n\n\n\n\n\n\n\n
Their balance sheet<\/th>\nFigure<\/th>\n<\/tr>\n<\/thead>\n
6 Bengaluru properties<\/td>\n\u20b95.85 crore, 66% of net worth<\/td>\n<\/tr>\n
Equity<\/td>\n\u20b917.8 lakh, 2% of net worth<\/td>\n<\/tr>\n
Goals falling due by 2034<\/td>\n\u20b93 crore<\/td>\n<\/tr>\n
Years to retirement<\/td>\n8<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The problem was not wealth. It was timing. A flat cannot be sold in slices or timed to an admission letter, and the report notes that a rushed sale typically costs 15% to 20% of a property’s value. With 6 properties and a \u20b995 lakh salary, they had no liquid way to fund \u20b93 crore of goals by 2034.<\/p>\n

They were also looking at a 7th property, which would have locked another \u20b91.25 crore into an asset class already at 66% of their wealth. The advisor talked them out of it.<\/p>\n

What changed:<\/p>\n

    \n
  • New savings went into goal-mapped equity, and each goal got a funding source and a date.<\/li>\n
  • NPS contributions rose from \u20b910,000 to \u20b946,600 a month.<\/li>\n
  • Tax-inefficient FDs moved to arbitrage funds.<\/li>\n
  • Retirement income was planned to rely less on rent.<\/li>\n
  • They drafted their first will, mapping succession across all 6 properties, and every nomination was checked.<\/li>\n
  • A health top-up took cover to \u20b925 lakh, and term cover is set to step down as savings grow.<\/li>\n<\/ul>\n

    The report values the advice at 162 basis points of net worth a year before fees, against a fee of 9 basis points: net value of about \u20b913.6 lakh a year, 18 times the fee. The largest share, 91 basis points, came from stopping the 7th property and building the couple’s tolerance for equity swings.<\/p>\n

    5 questions to ask before buying property<\/h2>\n

    The EMI test checks whether you can service the loan. These check whether the purchase fits the rest of your financial life:<\/p>\n

      \n
    1. Where does the down payment come from?<\/strong> If it means emptying the investments earmarked for other goals, those goals restart from zero.<\/li>\n
    2. What happens to each of your goals?<\/strong> Run every goal, retirement included, with and without the purchase.<\/li>\n
    3. How much of your net worth will sit in property afterwards?<\/strong> Concentration in 1 illiquid asset class makes every future goal depend on a sale.<\/li>\n
    4. Can you fund the next 8 to 10 years of goals without selling a property?<\/strong> If not, you are relying on selling at the right time and price.<\/li>\n
    5. Is waiting a real option?<\/strong> For Farid and Sameera, waiting until 2030 kept 4 of 5 goals on track. The flat will still be there; the compounding years will not.<\/li>\n<\/ol>\n

      Source: 1 Finance, What personalised financial advice is actually worth, 2026 research report. Names and some details have been changed. Figures are estimates based on the report’s stated assumptions, including a 12% long-term equity return, and do not guarantee similar outcomes for others.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

      A \u20b91.02 lakh EMI was 16% of income, yet buying a \u20b92.2 crore flat cut a Mumbai family\u2019s retirement odds to 58%. And a Bengaluru family with 6 flats.<\/p>\n","protected":false},"featured_media":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"_updated_date":"","_blog_featured_landing":false},"blog-category":[381],"acf":{"alt_text":"","include_in_calculator_page":"","hash_tags":"","spotify-id":"","show_audio_player":false,"audio_title":"","audio_link":"","key_takeaway":"","article_sources":""},"yoast_head":"\nIs the EMI affordable? 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