You surely have dreamt of a big luxurious dream house of yours?. Blessed are those who acquire it from their parents. But not everyone is lucky. Everyone wants to buy a luxurious house without any loan or mortgage! What if I tell you that it is absolutely possible? It is just a matter of patience and discipline. By following the below tips and tricks you are sure to buy a house of your own without any loan. Yes, you heard it right absolutely NO LOAN at all. No loan means no debt, more savings, and more money to enjoy life.
Let me take examples of real scenarios to show you how is it possible to buy a house without any loan!
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Real Scenario – Thinking of Buying a House on Loan? Think Again!
- My friend Sam bought a house worth 50 lakhs ($72K) when he was 29 years old with a salary of 1 lakh per month (take-home salary).
- He was married with no children yet, so he could afford to pay EMI’s of Rs 55,000 ($786) per month.
- He needs to pay this amount for 30 years to pay off the (entire loan/mortgage + interest) totaling Rs 19,800,000 (1.9 crore+)($282K).
- The interest itself amounts to Rs 1.4 crores ($200K), which is huge. This is what you will end up paying.
- Think again if is it worth spending so much, as ownership of the house will be transferred to you only once you pay off all the debts.
Calculations for Buying a house on Loan or Mortgage:
- Monthly EMI’s= Rs 55,000 ($786)
- Yearly EMIs Rs 6,60,000 (9.4K)
- Total Amount payable at the end of 30 years = Rs 660000*30=Rs 19,800,000 (Rs1.9 crores+)($282K)
What if I tell you a different way to own a house without a Loan or Mortgage?
Slow and steady wins the race and the same patience is applied here to buy a home without any loan. By following the below steps you will not get possession of the house immediately, but yes you will become the actual owner of the house much before 30 years. Also, you will own the house without spending sleepless nights worrying about paying monthly house loan EMI’s.
Let’s follow the below steps:
Monthly SIP payments :
- Let’s say you invest Rs 55000 ($786) monthly in the form of SIP (Systematic Investment Plan) to mutual funds for 9 years (choose an aggressive investing plan which means investing 70% of your funds in equity-based mutual funds), the total amount at the end of 9 years considering 13% rate of return which is very nominal would be Rs 1.13 Crores ($161K).
- Consider inflation into account, so after 10 years the same house might cost you 30 lakhs more ($43K)
- Now you pay Rs 80 lakhs ($114K) as the cost of the house and you are still left with Rs 33 lakhs ($47K).
- For these 9 years you continue living in a rented house, assuming monthly rent to be Rs 15 thousand rupees ($214), even then for 15 years it will amount to 16.2 lakhs ($23K)and you will still be left with (Rs 33 lakhs – Rs 17.2 lakhs) 15.8 lakhs ($22.5K) to enjoy, thus the rent that you pay is in no way close to the total loan/mortgage amount paid in 1st scenario.
- This is how you end up purchasing your own house in just 9 years following a simple way and definitely not spending 30 years under loan/mortgage burden.
- Also, you do not end up paying a whopping 1.9 crores ($282K), rather after 9 years since you are debt-free, you have the capability to save more, become financially strong, and attain financial freedom.
Calculations for Buying House without Loan or Mortgage:
- Monthly SIP = Rs 55,000 ($786)
- Yearly SIP= Rs 6,60,000 (9.4K)
- Total Amount received after the end of 9 years at the rate of 13% per annum (which is lowest) = Rs 1.13 crores ($161K)
- Amount spent on rent for 9 years (assuming rent of Rs 15000 per month and increase year on year) = Rs 17.2 lakhs ($24.5K)
- Amount left with after purchasing the house and paying rent = (Rs 1.13 crores – Rs 80 lakhs – Rs 17.2 lakhs) or ($161K-$114K-$24.5K)= Rs 15.8 lakhs ($22.5K)
Assume you had the patience to continue your SIP till 15 years then you will end up saving Rs 3.6 crore ($514K), making you rich.
Lumpsum Amount
- Let’s say you have Rs 35 lakhs and you invest in good mutual funds for 9 years (choose an aggressive investing plan which means investing 70% of your funds in equity-based mutual funds), the total amount at the end of 9 years considering 13% rate of return which is very nominal would be Rs 1.05 Crores.
- Consider inflation into account, so after 10 years the same house might cost you 30 lakhs more.
- Now you pay Rs 80 lakhs as the cost of the house and you are still left with Rs 25 lakhs.
- For these 9 years you continue living in a rented house, assuming monthly rent to be Rs 15 thousand rupees, even then for 15 years it will amount to 16.2 lakhs and you will still be left with (Rs 25 lakhs – Rs 17.2 lakhs) 7.8 lakhs to enjoy, thus the rent that you pay is in no way close to the total loan/mortgage amount paid in 1st scenario.
- This is how you end up purchasing your own house in just 9 years following a simple way and definitely not spending 30 years under loan/mortgage burden.
- Also, you do not end up paying a whopping 1.9 crores, rather after 9 years since you are debt-free, you have the capability to save more, become financially strong, and attain financial freedom.
Calculations for Buying House without Loan or Mortgage:
- Lumpsum amount invested = Rs 35,00,000
- Total Amount received after the end of 9 years at the rate of 13% per annum (which is lowest) = Rs 1.05 crores
- Amount spent on rent for 9 years (assuming rent of Rs 15000 per month and increase year on year) = Rs 17.2 lakhs
- Amount left with after purchasing the house and paying rent = (Rs 1.05 crores – Rs 80 lakhs – Rs 17.2 lakhs) = Rs 7.8 lakhs
Assume you had the patience to remain invested till 15 years then you will end up saving Rs 2.19 crore, making you rich.
Yes, you can buy a house without any loan along with a luxurious car of your own! Thus now you know what is the best way to invest and how to buy a house without taking any loan or mortgage.
FunFacts
- As of April 2021, Kotak Mahindra Bank is offering the lowest home loan or mortgage at 6.65%, followed by HDFC & ICICI Bank.
- Due to Covid-19 the defaulted loans of banks estimated around Rs 8.42 trillion as of June 30, 2020.
Let us know when will you plan to buy a house without a loan?