You’re paying Rs 1.65 cr for a Rs 1 cr house. Here’s how to cut it to just Rs 65 lakh

Most people think buying a house means locking up your life savings and struggling with EMIs for decades. But smart investors? They flip the script. They don’t just buy a home—they buy it strategically. CA Nitin Kaushik breaks it down for us. Suppose you're eyeing a house worth Rs 1 crore. The bank offers a home loan at 8% interest for a tenure of 25 years, and you have a surplus of Rs 50 lakhs to work with.

Kaushik explains that in the traditional approach, most people would pay Rs 50 lakhs upfront as a down payment and take a Rs 50 lakh loan. That loan translates into an EMI of Rs 38,591 per month. Over 25 years, that’s Rs 38,591 x 12 x 25 = Rs 1.16 crore paid in EMIs alone. Add the initial Rs 50 lakh down payment, and your total cash outflow becomes Rs 1.65 crore. In other words, you’ve paid Rs 65 lakhs in pure interest over the years for the same house.

Here’s what the average homebuyer does:

Rs 50 lakh down payment

Rs 50L loan → EMI = Rs 38,591/month

Over 25 years:

Rs 38,591 x 12 x 25 = Rs 1.16 Cr in EMIs

Total outgo = Rs 1.65 Cr (including Rs 50 lakh upfront)

That’s Rs 65 lakh in pure interest!

SWP + EMI strategy

Now let’s look at the smart SWP + EMI strategy that financially savvy investors use. Instead of putting Rs 50 lakh upfront, you make a smaller Rs 20 lakh down payment and take an Rs 80 lakh loan, which gives you an EMI of Rs 61,745 per month. Then, you invest the remaining Rs 30 lakh (from your surplus) in mutual funds. You set up a Systematic Withdrawal Plan (SWP) to withdraw Rs 25,000 per month from that investment to partially fund your EMI. The remaining Rs 36,745 is covered from your salary.

Over 25 years, your total EMI payments come to Rs 61,745 x 12 x 25 = Rs 1.85 crore. Add the Rs 20 lakh down payment, and your total cash out is Rs 2.05 crore. But here's the twist: the Rs 30 lakh invested in mutual funds grows over 25 years—at an assumed CAGR of 11–12%—to approximately Rs 1.4 crore. Subtract that from the Rs 2.05 crore outflow, and your net effective outgo is just Rs 65 lakhs.

That means you end up owning the same Rs 1 crore house, but effectively paying only Rs 65 lakhs instead of Rs 1.65 crore. That’s a Rs 1 crore difference—purely because you used your surplus smartly, not passively.

This is how financially savvy people structure the same deal:

Put Rs 20 lakh as a down payment

Take Rs 80 lakh loan → EMI = Rs 61,745/month

Invest the remaining Rs 30 lakh in Mutual Funds (MFs)

Set up a Systematic Withdrawal Plan (SWP) of Rs 25K/month from the MF

Cover the rest of the EMI (Rs 36,745) from your salary

Over 25 years:

Cash outflow = Rs 61,745 x 12 x 25 = Rs 1.85 Cr

Add Rs 20L down payment → Total cash out = Rs 2.05 Cr

Meanwhile, the Rs 30 lakh invested grows (at ~11–12% CAGR) to approx Rs 1.4 Cr

So the Net Effective Outgo = Rs 2.05 cr – Rs 1.4 cr = Rs 65 lakhs

Of course, there are a few key considerations. SWP withdrawals are taxable, currently 10% on long-term capital gains above Rs 1 lakh annually. Market returns aren’t guaranteed, so this strategy works best with long investment horizons and patience. But if done right, it’s a powerful way to let your money work for you.