Home Loan+SIP: How SIP of 12% of EMI amount can make your Rs 65 lakh, 25-year home loan interest-free
Home Loan+SIP Calculator: If you take a Rs 65 lakh loan for 25 years, the estimated equated monthly instalment (EMI) will be Rs 56,790, the estimated interest will be Rs 1,05,37,085, and the estimated repayment will be Rs 1,70,37,085.
Home Loan+SIP Calculator: When we take a home loan for a long duration, such as 25 years, the interest on the principal amount can be much higher. If we keep our equated monthly instalment (EMI) high, the duration of the loan and the interest amount can be reduced significantly. But we keep EMI as per our monthly income. Going for a higher EMI sometimes is not possible. But what if you invest a small portion of the amount equal to your EMI in a mutual fund SIP for the same duration as your loan? Even that small amount can help generate a corpus that can easily match the interest amount you will play in your loan duration. In this write-up, we will show how with just a 12% SIP investment of the amount equal to your home loan EMI, you can cover the expenses of the home loan interest amount.
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Home Loan Conditions
For our projections, we are taking the example of a Rs 65 lakh home loan at a 9.50 per cent interest rate for 25 years.
What will be home loan EMI?
The estimated EMI in such a case will be Rs 56,790.
What will be home loan interest and repayment amounts?
The estimated interest amount for the loan will be Rs 1,05,37,085, and the estimated repayment will be Rs 1,70,37,085.
What will be mutual fund SIP investment conditions?
The SIP mutual fund investment amount here will be Rs 6,814.8, which is 12 per cent of the EMI amount (Rs 56,790).
What will be mutual fund SIP investment conditions?
The annualised return on this investment should be 12 per cent, and the SIP will go on for 25 years (the duration of the loan).
What will be estimated SIP returns in 25 years?
At 12 per cent annualised SIP returns, estimated long term capital gains will be Rs 95,54,636, and the expected amount will be Rs 1,15,98,836.
What will be post-tax returns?
On Rs 95,54,636 long-term capital gains, the tax exemption will be Rs 1,25,000 (as per the current rule). Estimated taxable income will be Rs 94,29,636.
What will be post-tax returns?
As per the prevailing 12.50 per cent long term capital gain tax rate, the estimated tax will be Rs 11,78,704.5, and estimated post tax expected amount will be Rs 1,04,20,131.
What will be post-tax returns?
The amount will nearly be the same as the interest amount you will pay in 25 years.
Disclaimer
(Disclaimer: Our calculations are projections and are not investment advice. Do you own due diligence or consult an expert before financial planning.)