Burdened by a Long Home Loan? Try THIS Investment Hack to Save Big on Interest
Everyone dreams of their own house, but the long loan tenure can be a headache. What if you could clear your home loan faster and also save lakhs in interest? This smart trick using mutual funds might be the answer.
15
Image Credit : Home Loan\Twitter
Everyone's Dream
Buying your own house is a big life goal for most of us. Many people spend 15 to 20 years just paying off EMIs. But business experts say that with some smart financial planning, you can not only clear your home loan much faster but also make some extra money on the side.
Add Asianet Newsable as a Preferred Source
25
Image Credit : Getty
Precautions Before Taking a Home Loan
Before you even sign the loan papers, it's crucial to think about your job stability. In today's world, jobs can be unpredictable. That's why it's a good idea to build an emergency fund or a mutual fund portfolio first. For instance, if you plan to buy a house worth ₹70 lakh, creating a mutual fund portfolio of ₹1 crore beforehand ensures you won't face trouble even if you lose your job.
35
Image Credit : Getty
Why a Longer Tenure is Better Than a Shorter One
Most people opt for a 15-year loan to pay less interest. But experts suggest choosing a longer tenure, like 20-25 years. Here's the logic: home loan interest rates are low, around 8.5% to 9%. You should take the difference in EMI between a 15-year and a 20-year loan and invest it in a mutual fund instead.
45
Image Credit : Asianet News
The Mutual Fund Magic
Let's take an example. For a ₹50 lakh loan, the EMI for 15 years is about ₹49,000, and for 20 years, it's ₹43,000. The difference is ₹5,800. If you invest this amount every month in a Nifty index fund that gives 12% returns, you'll have nearly ₹32 lakh after 15 years. You can use this to pay off the rest of your loan and still be left with ₹11 lakh!
55
Image Credit : Getty
Invest in Mutual Funds
If you get some extra cash, don't rush to prepay your loan. Business experts suggest you can earn more by investing that money in mutual funds. They also warn people not to get emotional and dip into their retirement savings just to buy a house.
Stay updated with all the latest Business News, including market trends, Share Market News, stock updates, taxation, IPOs, banking, finance, real estate, savings, and investments. Track daily Gold Price changes, updates on DA Hike, and the latest developments on the 8th Pay Commission. Get in-depth analysis, expert opinions, and real-time updates to make informed financial decisions. Download the Asianet News Official App from the Android Play Store and iPhone App Store to stay ahead in business.
Latest Videos
