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News India Live, Digital Desk: Loan Tenure: Buying your house is a dream, but comes with this dream that the home loan lasting for years and heavy interest on it. It often happens that the more loans we take, the more or more money we pay as interest. But is there any way to get this interest money back or our loan ends quickly?
Yes, there is a very smart way, and its name is SIP (Systematic Investment Plan),
What is this magical formula?
This formula is very simple. All you have to do is that as soon as your home loan starts, you your monthly EMI (installment) 10% share Start investing through SIP in a good equity mutual funds.
Let us understand it from an example:
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Suppose you ₹ 30 Lakh Home loan 20 years For 9% Has taken at the interest rate of.
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Your monthly EMI almost ₹ 26,992 Will be made
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Total you in 20 years ₹ 64.78 Lakh Will repay (₹ 30 lakh principal + ₹ 34.78 Lakh Interest,
Now the magic starts from here.
10% Rule of SIP:
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You have 10% of your EMI (₹ 26,992) ie almost ₹ 2,700 To invest in a SIP every month.
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You have to continue this investment for a full 20 years.
What will happen after 20 years?
If we assume that on average annually on your SIP 12% return Get (which can be expected from equity mutual funds in the long term), then after 20 years your ₹ 2,700 month investment price Around ₹ 27 Lakh Will be done!
Now see maths:
This means that you withdrew a large part of your paid interest (about 77%). This made your loan almost like “interest free”.
How to finish the loan in 15 years?
This formula has another advantage. If you do SIP of ₹ 2,700 continuously for 15 years, then you almost have 12% returns ₹ 13.62 Lakh The fund will be deposited.
After 15 years, the outstanding principal of your home loan (about ₹ 13.26 lakh) will be saved, you will pay it together with this SIP money Loan finished 5 years ago Can do!
Final advice: This is a disciplined and long -term strategy. The sooner you start SIP with a loan, the bigger you will get.