SIP Power: Invest 20% of your EMI in SIP, by the time your loan ends, you will recover the full cost of your house

Home Loan Planning : Buying a house in today’s time is a big challenge. Due to the ever-increasing inflation, for most people, buying a house means spending many years of life in financial pressure. After buying a house, while people spend 15 to 20 years or even more in paying the loan EMI, they have to pay more interest to the bank than the loan taken for the house. In such a situation, if you are a smart investor and plan your investment smartly as soon as you buy a house, then you can recover the interest money along with the loan.

Mutual Fund SIP Help

Financial advisors suggest taking the help of mutual fund SIP for this. They say that if you are capable, you can start a SIP as soon as the EMI starts with the goal that by the time the loan ends, whatever expenses have been incurred by adding interest to the price of the house, have to be recovered. If you stick to this goal in a disciplined manner, then you will also see the power of SIP by the time the EMI ends. Let us tell you that at present most of the banks are charging 8 to 9 percent or 9.50 percent interest on home loans.

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Interest more than the loan value

Let’s assume that you need to take a loan of Rs 30 lakh from the bank to buy a house. You are taking this loan for 20 years. Currently, the interest charged by SBI on home loan is around 9 percent. In this sense, you make a total payment of Rs 64.78 lakh to the bank in exchange of Rs 30 lakh, of which Rs 34.78 lakh is interest.

Home loan amount: Rs 30 lakh
Interest Rate: 9.00%
Loan tenure: 20 years
EMI: Rs 26,992
Total Interest: Rs 34,78,027
Total payment to the bank against the loan: Rs 64,78,027

(SBI Interest Rates)

Deposit money in this scheme instead of bank, you will earn 40 thousand rupees every month, entire deposit will be returned after maturity

Do SIP for 20% of your EMI amount

Here your monthly EMI is Rs 26,992. As soon as the EMI starts, you should invest 20% of this amount as SIP. That is, you will have to invest Rs 5400 every month in a good mutual fund scheme through SIP (Start SIP). This investment will also be for 20 years. If you look at the return history, there are many such schemes in which the SIP return has been 15% or more in 20 years.

Monthly SIP: Rs 4050
Return: 20% per annum
Value of SIP after 20 years: Rs 81,86,157 (Rs 81.9 lakh)
Your total investment: Rs 12,96,000 (Rs 13 lakh)
Interest benefit: Rs 68,90,157 (Rs 68.9 lakh)

After 20 years, the total value of SIP became Rs 81.9 lakh. Even if you withdraw your investment from it, you still get an interest benefit of about Rs 68.9 lakh. Whereas you are making a total payment (including loan and interest) to the bank of almost the same amount of Rs 64,78,027. In a way, your entire expense is covered.

EPF: If your basic salary is Rs 20,000, you will get Rs 1.50 crore fund on retirement

20 years: Funds giving high SIP returns

Sundaram Midcap Fund: 22% CAGR
Nippon India Growth Fund: 22% CAGR
SBI Long Term Equity Fund: 21% CAGR
ICICI Pru FMCG: 21% CAGR
SBI Consumption Opportunity Fund: 20.61 CAGR

(Note: We are giving information here based on conversations with experts and the performance of the fund. This is not an investment advice. There are risks in the market, so definitely consult an advisor before investing.)