Why You Must Calculate Your EMI Before House Hunting

The 'House Poor' Trap

Banks will often approve you for a mortgage that pushes the absolute limits of your debt-to-income ratio. However, just because you are approved for a massive loan doesn't mean you can comfortably afford it while maintaining your lifestyle.

The 30% Rule of Thumb

A standard financial guideline is that your total housing costs (including your EMI, property taxes, and insurance) should not exceed 30% of your gross monthly income.

Using an EMI Calculator Strategically

Before ever viewing a house or falling in love with a property, you should run your numbers through an EMI Calculator. By doing this, you can:

• See exactly how different interest rates affect your monthly cash flow.
• Understand the massive difference a 15-year vs a 30-year tenure makes on the total interest paid.
• Set a hard budget for property hunting based on the monthly payment you are truly comfortable with paying over the next decade.