Home Loan vs SIP: What's the Smarter Way to Buy a ₹1 Crore House?

Buying a home is one of the biggest financial decisions most individuals make in their lifetime. With rising property prices and evolving investment options, buyers today are faced with a crucial choice — should they take a home loan and buy the house immediately, or invest the equivalent EMI amount in mutual funds through a Systematic Investment Plan (SIP) and purchase the house later?

This article compares both strategies using the example of a ₹1 crore home, helping readers understand which path may offer better returns and financial flexibility in the long run.

Option 1: Take a Home Loan Now

Let’s say you buy a house worth ₹1 crore today and make a 10% down payment of ₹10 lakh. Assuming that the interest rate on your ₹90 lakh loan payable over 25 years is 9.5%, here is how much you’d have to pay:

• Monthly EMI = ₹78,633
• Total Interest Paid = ₹1.45 crore
• Total Repayment = ₹2.36 crore

Pros: With this option, you get to move into your own home immediately. You can enjoy the pride of ownership, freedom to decorate it your way, and save on rent. Plus, you can claim tax benefits on both principal and interest under Sections 80C and 24B of the Income Tax Act.

Cons: With this option, you end up paying ₹1.45 crore just in interest over 25 years. This affects your ability to save and invest in other goals. You also commit to a long-term EMI, which reduces financial flexibility.

Option 2: SIP Investment, Then Buy Later

What would happen if you invested ₹78,633/month in mutual funds with an expected annual return of 10% for 15 years? Here’s how your finances would look like:

• Total investment = ₹1.41 crore
• Corpus after 15 years = ₹3.44 crore

In this case, even if the value of your house increases at 5% annually, you would be able to comfortably pay for your house worth ₹2.08 crore. Assuming that you rent a place for ₹20,000/month with a 5% annual increase, you would only pay around ₹52.8 lakh. This would still leave you some money for upgrading the house of your choice or shifting goals if needed.

Final Comparison of Paying EMIs Vs. Investing in Mutual Funds for ₹1 Crore House

Read more: Best Flexi Cap Funds in July 2025: Kotak Flexicap, Parag Parekh Flexi Cap and More Based on 3Y CAGR.

Conclusion

There’s no one-size-fits-all answer. A home loan brings instant ownership and emotional satisfaction, but it comes at the cost of long-term interest. SIPs demand patience and discipline but reward you with financial strength and freedom.

If you value security and stability now, a home loan makes sense. But, if you’re financially savvy and can wait, SIP can help you afford more than just a home — it can help you build real wealth.

In the end, it’s not just about bricks and walls — it’s about what builds your future stronger.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.