SIP investment for 10 years vs home loan EMI for 25 years: Can you guess the quicker route to Rs 80 lakh home?
Home Loan vs Mutual Fund SIP: If you are taking a Rs 80 lakh home loan at a 9 per cent interest rate for 25 years, your estimated EMI will be Rs 67,136; the interest amount on this loan will be Rs 1,21,49,713. So, the total repayment amount will be Rs 2,01,40,713.
Home loan vs SIP: Do you know exactly how home loans work? You take a large loan for a long duration and pay an equated monthly instalment (EMI) for a long time. What happens in the process is that you pay more interest than the principal amount. For instance, if you are taking a Rs 80 lakh home loan at a 9 per cent interest rate for 25 years, your estimated EMI will be Rs 67,136; the interest amount on this loan will be Rs 1,21,49,713. So, the total repayment amount will be Rs 2,01,40,713.
But what if you plan on buying your home much in advance? Instead of taking a loan and paying EMI, what if you start a systematic investment plan (SIP) in a mutual fund for half the duration of the loan duration, say 12 years? Know which of the options can help you arrange money faster to buy your home.
Photos: Unsplash/Pixabay
(Disclaimer: This calculation is for knowledge purposes only. Do your own due diligence or consult an expert before financial planning.)
Home loan conditions
![Home loan conditions Home loan conditions](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311210-currency-500-pixabay-new.jpg)
Home loan EMI
![Home loan EMI Home loan EMI](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311211-coin-unsplash-take.jpg)
What if you invest the same amount in a mutual fund SIP?
![What if you invest the same amount in a mutual fund SIP? What if you invest the same amount in a mutual fund SIP?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311212-indian-currency-pixabay-take-3.jpg)
What if you invest that money for 10 years?
![What if you invest that money for 10 years? What if you invest that money for 10 years?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311213-currency-notes-new.jpg)
What if you invest that money for 12 years?
![What if you invest that money for 12 years? What if you invest that money for 12 years?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311214-fd-interest-file.jpg)
What if you invest Rs 50,000 a month for 10 years?
![What if you invest Rs 50,000 a month for 10 years? What if you invest Rs 50,000 a month for 10 years?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311215-ibrahim-rifath-oaphds2yegq-unsplash.jpg)
What if you invest Rs 50,000 a month for 12 years?
![What if you invest Rs 50,000 a month for 12 years? What if you invest Rs 50,000 a month for 12 years?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311216-indian-currency-take-unsplash.jpg)
Home loan vs SIP: What is the outcome?
![Home loan vs SIP: What is the outcome? Home loan vs SIP: What is the outcome?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311217-investment-unsplash-1.jpg)
What can be the mantra?
![What can be the mantra? What can be the mantra?](https://cdn.zeebiz.com/sites/default/files/2024/08/13/311218-money-18119351280.jpg)
The mantra can be to invest as much money as possible in your younger days. If you are young and can postpone your home buying decision, you can invest that money in an investment scheme where you get post-tax growth over and above your home loan amount. It is true that the price of property can increase during that duration, but in just half the duration, the same EMI amount that you would have spent in buying a home can be used in an SIP investment to buy home.