Buying a house is a dream of most Indians. That’s because in our society, having your own home is the ultimate sign of progress. People who live on rent are frowned up and are consistently pressured by family and friends to get their own house.
This pressure to buy a house combined with the astronomical real estate prices in most cities means most people need to take home loans to make this dream a reality.
On top of it, most people want to buy the house of their dreams, which means the home loans taken are huge. And with big loans come astronomical interest costs.
But what if we told you, there is a way to make your home loan interest free. Don’t believe us? Well, read on to know how.
Home loans cost you an insane amount of money over their lifetime
Most banks and housing finance companies highlight the EMI you need to pay for your dream house, making you believe that you can buy that house.
And while you might be able to afford the monthly installment, the cost of these loans is massive. In most cases, the interest paid on loan amount for a long-term loan is much higher than the loan amount.
So, if you keep paying monthly EMI for 20 years, you end up paying ₹ 86.37 lakhs in total. This ₹46.37 lakhs extra is the interest you pay.
Take a moment to think about it – you pay more than what you borrowed as interest plus the actual amount.
However, there is no way out to get rid of interest because that’s the way the loan system works.
So, does it mean you should not buy a house till the time you don’t have the entire amount? If you can, nothing like it. But for most of us, this might not be a viable option.
The Solution – Recover the interest amount you will pay by investing in mutual funds
By starting a SIP of .10% of your home loan amount in a mutual scheme, you recover the interest amount.
Let’s continue with the example we mentioned above.
If you start a monthly SIP of ₹ 4,000 (0.10% of the loan amount), your investments at a 15% average annual return will grow to a total of ₹ 59.88 lakhs in 20 years.
From this corpus, even if you deduct your invested amount, which is ₹ 9.6 lakhs, then also you will have ₹ 50.28 lakhs in your hands which is more than enough to cover the interest you will pay.
This calculation holds true no matter what your loan amount is.
The Bottomline:
If you have taken or are planning to take a loan to buy your dream home, you will have to pay interest costs. But with a small SIP, you can recover the entire amount with ease. You can use tools like SIP Calculator to calculate your estimated returns on investment.
However, this will become a reality only if you keep investing that amount and demonstrate patience.
To know how you can achieve this, follow this link and enter details on the next page
