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How to Prepay a Home Loan in 10 Years | Home Loan vs Investing in Mutual Funds
Original: How to Prepay Home Loan in 10 Years ? | Home Loan vs Investing in Mutual Funds in Telugu
Takeaway
Stepping up prepayments by 10% a year can close a 20-year home loan in 10 years, but investing the same surplus in mutual funds usually leaves you Rs.4+ lakh richer.
Summary
- Strategy: pay your scheduled EMI as usual, then prepay an extra amount each year that grows by 10% annually (matching typical salary hikes).
- Year 1 EMI Rs.21,694; Year 2 extra Rs.23,864/month; Year 3 extra Rs.26,251 etc. - this stair-step prepayment closes a 20-year loan in ~10 years.
- Compares this against the alternative of investing the same surplus in equity mutual funds at ~12% expected returns.
- Worked Excel calculation shows mutual-fund route ends with ~Rs.4,44,344 extra wealth vs pure prepayment, after accounting for loan interest saved.
- Conclusion: investing the surplus typically beats prepayment for borrowers in lower tax slabs with long horizons; Part 2 promised for the deeper calculation.
Home LoanPrepaymentMutual FundsEMI StrategyPersonal Finance
Original description
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