SIP with Home Loan: Buying a home by taking a home loan can be expensive, as the heavy interest increases the financial burden on people. Often, the total amount paid on the home loan is almost double the original price of the house. One possible way to compensate for this additional interest is through a Systematic Investment Plan (SIP). If you invest in SIP in parallel, the potential returns in the long term can help you recover the interest amount, which will eventually effectively recover the cost of your home and make your home loan-free.
If you have taken a home loan of Rs 50 lakh, then you will have to pay interest of about Rs 55 lakh for the next 20 years. If the total repayment amount is seen, it will be more than Rs 1 crore. That, too, when the interest rates remain at 8.5 percent throughout the repayment tenure. If you have done this much calculation, then now is the time to make a strategy through which you can create a corpus equal to the price of the house along with the tenure of the home loan.
Make a better strategy by investing in SIP-
If you buy a house worth ₹ 50 lakh and take a loan of ₹ 40 lakh, then you will pay a large amount as interest. A mutual fund SIP can be a good option to recover this interest. The strategy should be to start a monthly SIP for the same period as the loan EMI starts. How much money to invest in SIP every month will depend on the EMI. Usually, if you do SIP of 20-25% of your EMI, then you can create a fund equal to what you will pay to the bank by the end of the home loan tenure.
Home loan interest can be easily recovered through SIP. If you invest ₹5000 per month at an interest rate of 12-15% for 10 years, you can get a return of around ₹14 lakh. You can use this amount to pay off your home loan, thereby efficiently utilising the SIP returns.
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