New Delhi: Having a dream home is ideal for many; homeownership is not always possible as prices of property have been rising over the years. The usual home financing schemes that people go to the bank for will take decades to pay off. On the other hand, if you put your money in the form of a Systematic Investment Plan (SIP), it will go a long way in reducing the weight of the loan burden.
Systematic Investment Plans (SIPs): The mutual funds also offer the option of SIPs to invest a fixed amount at regular intervals instead of lump sum investments. Over time, this strategy should have the effect of making home ownership a more attainable goal by building up big returns.
Let us assume you avail a loan of Rs 40 lakh to buy a home loan for a period of 20 years at an interest rate of 8.5%. This would lead to your EMI being about Rs 34,713 and a total payment of Rs 8,331,103 towards the end of the loan period, including interest.
If you invested 25–30% (nearly Rs 8,678) of your EMI via a SIP, the blow from the loan would be less. With a 12% annual return over 20 years, your total investment would be Rs 20,82,480, with approximately Rs 65,87,126 of it being interest income. This will give us a fund amount of Rs 8,669,606, sufficient to settle the loan amount in full.
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