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Home Loan Prepayment vs Investing: What’s Better? 💰

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About Home Loan Prepayment vs Investing: What’s Better? 💰

Explore Home Loan Prepayment vs Investing: What’s Better? 💰 with 66,195 views, 1,259 likes, and 44 comments. Experience the impact of this video content that has captured audience attention.

Paying off your home loan early feels like the obvious thing to do when you have some extra money. But should you actually do it? Take an ₹80 lakh home loan at 7.85% for 20 years. Your EMI is ₹66,170, and over the full 20 years, you’ll pay about ₹79 lakh in interest. Now suppose you have an extra ₹10,000 every month. There are two choices: Option 1: If you prepay that ₹10,000 every month, your loan gets over in roughly 15 years instead of 20. And your total interest falls from about ₹79 lakh to ₹56 lakh. So you save around ₹23 lakh in interest. Option 2: The other option is to invest that ₹10,000 every month instead. Over 20 years you’d be investing ₹24 lakh. At an assumed 10% annual return, that investment could grow to ₹72 lakh, giving you a profit of over ₹48 lakh. But obviously, that 10% return is an assumption, and the market can give you more, or less. So purely on the numbers, investing looks better. But here is a practical question: are you comfortable carrying the loan for the full 20 years? If having a big outstanding loan bothers you, prepaying can make sense even if investing could potentially make you more money. If you're comfortable with the EMI and can stay invested through market ups and downs, investing the extra ₹10,000 could make more sense.

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