Having a roof on your head is everyone’s dream. But sometimes the fear of the burden of long-term EMI becomes a hindrance in the dream of buying a house. Today we will tell you how you can eliminate EMI by making small changes in your home loan.
Recently, the terms of home loan have become easier due to the government’s tax relief and reduction in interest rates. In such a situation, this can be a good opportunity to reorgan your debt. If you increase your EMI a little, then your home loan will not only be repaid rapidly but you will also be able to save millions of rupees in interest.
12 lakh rupees savings
Suppose you have taken a home loan of Rs 40 lakh for 20 years at an interest rate of 8.5%, then your EMI will be around Rs 34,713. Now suppose that your monthly savings are Rs 7,572 due to the recent changes in the tax system. If you add 60%of this savings, ie about 4,500 rupees, your current EMI, then your debt duration will decrease from 20 years to 15 years and 2 months.
The most important thing is that with this small change, you can save a total of Rs 12.02 lakh in interest. This means that along with the completion of the loan, you will also have financial benefits.
Is it a profitable deal to invest in mutual funds?
Many people also choose to invest this additional amount in mutual funds SIP. But is this more beneficial than repaying home loan? Let us understand it like this-
If you invest Rs 4,500 every month in Mutual Fund SIP for 10 years. Suppose you are getting 12% returns on it, then your total investment will be Rs 5.4 lakh. After 10 years, this amount can increase to about 10.45 lakh rupees. After the tax deduction, you will get around 9.21 lakh rupees.
Meanwhile, after 10 years, the remaining original amount of your loan will be Rs 28.14 lakh. If you invest the entire amount of Rs 9.21 lakh in loan, then the original amount will be reduced to Rs 18.93 lakh. This means that you will have to pay more than 9 lakh rupees for the remaining 10 years. It is clear that paying additional EMIs can prove to be more beneficial than investing in mutual funds.
