A Bengaluru-based Reddit user recently shared how he feels financially suffocated after taking a Rs 1.2 crore home loan, despite earning Rs 2.2 lakh a month. While his EMI is Rs 75,000, the real struggle lies in everything that follows- family expenses, lack of liquidity, and zero mental peace.
Experts say this case, though extreme, is far from rare. Many high earners overcommit to large home loans too early and end up “asset-rich, cash-poor.” According to experts, here is a breakdown of the key mistakes the Reddit user likely made and what others should keep in mind before signing on a big loan.
Thinking high income means high affordability
“He earns Rs 2.2 lakh, but Rs 75,000 EMI already eats up 34 per cent of his income,” says Vineet Agrawal, co-founder, Jiraaf. “Factor in rent-like maintenance, bills, dependents, and basic savings and you’re suddenly tight.”
Manish Goel, managing director of Equentis Wealth, notes a behavioural pattern. “Young earners often spend aggressively on lifestyle, car EMIs, and risky investments. This crowding out of savings leads to chronic liquidity strain.”
Taking a Rs 1.2 crore home loan too early in life
At 30–35, committing to a 20-year EMI removes flexibility. “This is a decade where goals shift, marriage, children, job changes,” says Vijendra Singh Shekhawat, chartered accountant & chief executive officer at Choice Finserv. “A Rs 1.2 crore loan at 7.9 per cent means nearly Rs 1 crore in interest over 20 years unless you prepay.”
Agrawal adds, “With rising living costs, even a Rs 2 lakh salary doesn’t mean you are loan-ready. Ideally, home ownership should follow, not precede, financial foundation.”
Trusting loan approvals as a green signal
Banks may approve loans where EMI is up to 50–60 per cent of net salary. But that doesn’t mean you can afford it. “Approval is based on income and credit, not your entire financial picture,” says Amar Ranu, head of products & insights at Anand Rathi Share and Stock Broker.
Shekhawat agrees. “Lenders don’t factor your family obligations, insurance gaps, or investment goals. Responsibility lies with the borrower to self-assess.”
No pre-loan emergency or insurance planning
Many first-time borrowers skip creating a buffer. “If you’re committing Rs 75,000 every month, you need an emergency fund of at least 6–12 months of expenses,” says Ranjit Jha, chief executive officer of Rurash Financials.
Agrawal also recommends locking in term life and health insurance before any big loan. “It is not optional. If something happens, your family gets stuck with the burden.”
Planning to prepay without a strategy
The Redditor mentions wanting to close the loan in 5–7 years. But experts say aggressive prepayment should be done only after building emergency funds and securing long-term investments.
“People start dumping bonuses into loans and stop SIPs, that’s not sustainable,” says Goel. “You can repay faster, but only if your financial ratios stay healthy.”
Jha suggests a hybrid route: “Keep investing, and use bonuses or annual hikes for partial prepayments. That way, you cut tenure without choking cash flow.”
Checklist: Are you really loan-ready?
Before signing up for any large home loan, ensure you:
· Keep EMI below 30–35 per cent of your take-home
· Have 6–12 months of expenses saved as an emergency fund
· Continue investing monthly (don’t stop SIPs)
· Have term insurance equal to the loan amount
· Carry comprehensive health insurance
· Use realistic income estimates, not CTC
The bottom line:A home should bring security, not stress
“Buying a house is aspirational, but it shouldn’t come at the cost of your mental and financial peace,” says Agrawal. “Plan first, buy later.”
You may qualify for a big loan. But whether you can comfortably live with it is an entirely different question.