Availing Housing Loan is the biggest financial decision that most people take in the lifetime. For many Indians getting a dream home is the first life goal.
Recent developments in the real estate sector like RERA Act( Real Estate Regulation and development act ) and various scheme by government in providing affordable housing like PMAY ( Prime Minister Awas Yojana) has made easy access to home loans for all segments of people.
Housing Loans are always sanctioned for longer tenure, considering the repayment capacity of individuals, Source of income generation, age and various factors.
Banks sanctioning the housing loan charge interest from the borrower and He repays the debt through EMI (Equated monthly installment). EMI consists of interest portion and Principal portion. Beginning years Interest outgo will be more and it’s reduced over years.
Consider Mr.Ram has availed Rs 30,00,000 housing loan for 20 years at 8.5% Interest rate per annum and he needs to pay a EMI of Rs 26035 per month. By end of the loan tenure he would have paid Rs 62,48,400/-
Principle amount of Rs 30,00,000/-
Interest portion of Rs 32,48,400/-
Here we come to reduce your financial burden!
Mentotax recommends you to invest Rs 2643/- via SIP (Systematic Investment Plan) in equity mutual funds for 20 Years to recover the interest portion on the Housing loan.
Investment of Rs 2643/month in the equity fund that gives average return of 15% for 20 years can fetch you Rs 32,49,100 /-. Your corpus generated via investment can nullify your Interest portion on the housing loan.
Isn't that a better option to reduce your debt?? Being debt free is the financial freedom!!
Next post is on Tax Benefits on Housing Loan! Keep Reading!!
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