Introduction

The journey of a typical Indian middle-class family buying a home spans generations and decades. This article shares the experiences of a family who began their home-buying journey in the 1980s and faced numerous challenges along the way. The narrative captures the financial, social, and emotional aspects of the process, providing insights into the realities of home ownership during this period.

The Early Years (1982-1986)

As the story begins in 1982, the family was barely making ends meet. However, financial fortitude and support from family members played pivotal roles in their ability to secure the first home. The wife, employed, took out a loan from the bank for Rs. 60,000. To complement this, they tapped into various sources, including retirement savings and personal savings, to purchase a small flat and gift it to the parents.

The Foundation of Modern Life (1986-2000)

In 1986, the turning point arrived when the family received a significant financial boost—two foreign trainings. The foreign experiences not only broadened their perspectives but also enhanced their savings. Lives became more frugal, and the family managed to save an additional Rs. 1,00,000. Subsequently, they liquidated shares and other assets, which are now worth millions. These savings contributed significantly to their first major purchase—a flat in 2001.

The Struggle of First-time Home Buyers

The family's experience in 2001 exemplifies the typical middle-class struggle to own a home. By 2001, the family was truly middle-class, having experienced substantial financial growth. However, issues related to housing finance and interest rates made purchasing a flat more challenging. The cost of the flat was a modest 7.5 lakhs in 1992, but the financial landscape was quite different:

Difficulties Faced

Limited housing finance options: In the early 1990s, only a few financial institutions, such as HDFC, LIC, and Dewan Housing Finance, offered home loans. High-interest rates: The interest rate for housing loans was an unaffordable 16.5%. Substantial down payment: Initially, HDFC agreed to a loan of Rs. 90,000, increased to Rs. 1,10,000, and later to Rs. 1,40,000 after securing three guarantors. Financial constraints: The family had limited savings. The husband's take-home salary was Rs. 2,800, and his wife earned Rs. 1,600. They managed to have Rs. 5,000 in savings. Parenthood and responsibilities: The couple had to delay planning a child due to financial constraints. They postponed the planned pregnancy to focus on the home purchase. Expense management: The EMI for the home loan was Rs. 2,142, while their rent was Rs. 900 per month. This left them with only Rs. 1,358 to cover their expenses.

Overcoming the Challenges

The family’s determination to purchase a home was unwavering. They liquidated all assets, including their father's flat in Nashik and shares worth 2.4 lakhs. Additionally, the father-in-law generously gifted Rs. 1,40,000. Their father sold shares inherited from his father, leading to emotional moments of nostalgia.

Final Steps

Despite the challenges, the family managed to secure the needed funds. However, the loan process was arduous. HDFC required a 6.1 lakh down payment before disbursing the loan. The family managed to gather the necessary funds by selling various assets. The flat was in the Aundh area of Pune, costing 560/sq.ft, which was a reasonable rate for the time.

Conclusion

The case study of this family illustrates the challenges faced by middle-class families in India over three decades. From the early struggles of the 1980s to the financial stability of the 1990s, the journey reflects the resilience and determination needed to achieve the dream of homeownership. The family's story serves as a reminder of the broader economic and social changes that have shaped the real estate landscape in India.