Step-by-Step Guide: How to buy a home without a loan

Owning a home is a dream for many, but the thought of hefty down payments and EMIs often holds us back. Experts suggest that it's possible to achieve this dream without taking a loan. By following their advice, you could own a property worth around ₹1 crore. Let's explore how.  

For a middle-class person, life revolves around a job, marriage, children, their education, their weddings, and finally buying a house. By the time all this is done, old age sets in. This is the story of many households. You can check it yourself if you want. However, earlier, whether it was getting married or building a house, one had to take loans. Now, with the incentives given by the governments, building a house is simple. Loans are being given. You can realize your dream of owning a house by paying them in the form of EMIs. The problem with this is that you have to spend your whole life paying EMIs. Some people buy a house by taking a loan for the down payment without saving enough money.

Buying a plot and building a house on it is even more expensive. That's why most people prefer to buy a flat in an apartment. There are some difficulties in this too. Some experts say that the value of the plot is decreasing every year. In such times, experts suggest that by following a small idea, you can buy a house without taking a loan after ten years. Let's find out how.

Invest in Mutual Funds

Let's say the flat you want to buy costs ₹50 lakhs. If you are ready to pay ₹10 lakhs as down payment, you still need to take a loan of ₹40 lakhs. Instead, first invest ₹10 lakhs in mutual funds at once. It has the potential to grow at 15 percent per annum. If you invest for ten years, you will save around ₹40 lakhs.

Phased Investment

If you take a loan of ₹40 lakhs and buy a house now, you have to pay EMIs for 20 years. This means you have to pay an EMI of ₹36,000 per month at an interest rate of 9 percent. Instead, start saving the same amount from now on.

Currently rent a house. Allocate ₹10,000 for rent. Invest ₹26,000 every month in a phased investment method. This will earn 14 percent interest. For this, you have to invest in mutual funds for ten years. By doing this, you will get a total of ₹68 lakhs after ten years.

By investing your initial savings of ₹10 lakhs in mutual funds, you will get up to ₹40 lakhs in ten years. By investing ₹26,000 every month for ten years, you will get up to ₹68 lakhs. After 10 years, you will have a total of ₹1.08 crores in your hand.

Let's assume that the value of real estate has increased after ten years as per the real estate boom. This means that there is no doubt that the house which costs ₹ 50 lakhs now will cost ₹ 1 crore in another ten years. However, after ten years, you will have saved more than one crore rupees. Therefore, experts say that you can buy a flat without any problem. They say that the dream of owning a house can be realized without taking a loan.