The Smart Way to Repay Your Home Loan
20 Jun 2024
The Smart Way to Repay Your Home Loan
Assume you had opted for a home loan of ₹50 lakhs in 2005 at the rate of 8.4%^. The EMI payable for 15-year period would have been ₹ 48,944 . However, if you had extended the loan period to 20 years, the home loan EMI would have reduced to ₹ 43,075.
Instead of choosing a shorter loan term, you could have considered a 20-year loan period and initiated an SIP with the remaining amount of ₹ 5,869 into a suitable equity mutual fund.
| Who Is Smarter At Repaying A Home Loan Of ₹32 Lakhs? | Mr. A | Mr. B |
|---|---|---|
| Loan repayment term | 15 years | 20 years |
| EMI per month started in 2004 (in ₹) | 48944 (A) | 43075 (B) |
| SIP per month in S&P BSE Sensex TRI in 2004 (in ₹) | - | 5869 (A-B) |
| After 15 years | ||
| Total EMI paid (in ₹) | 88,09,920 | 77,53,500 |
| Total SIP Investment | NIL | 10,56,420 |
| Rate of Return of S&P BSE Sensex TRI (p.a.)* | - | 14.37% |
| Principal outstanding (in ₹) | NIL | 21,04,477 |
| Total SIP Corpus# (in ₹) | - | 37,30,902 |
| SIP corpus left after paying O/S principal (in ₹) | 16,26,425 |
For Illustration Purpose only
*Returns: Mean of 15 year daily rolling returns of S&P BSE Sensex TRI between 2011 and 2024.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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