Home Loan EMI+SIP: Everyone wants to buy a house, but if you want to buy a 2BHK in a place like Delhi-NCR, it is necessary to have a budget of Rs 50 lakh. A middle class person spends all their savings in buying a house, but may still fall short of money.
In such a situation, they need a home loan, which they spend their entire life repaying.
To buy a house, 80-85 percent people have to take a home loan, after which a large part of their monthly salary goes in the form of equated monthly installments (EMIs).
Now, the question is how to recover the cost of the house?
Would it have been better to rent a house instead of buying one?
If you also want to recover the cost of your house, then mutual fund investment through Systematic Investment Plan (SIP) will help you in this.
Calculation of home loan
Suppose you have taken a home loan of Rs 40 lakh (80 per cent) to buy a house worth Rs 50 lakh and have made an EMI for 20 years.
If you have got this loan at the rate of 8.5 per cent, then you will have to pay an EMI of Rs 34,713 every month for 20 years.
Here we are also assuming that the interest rate will remain the same (fixed rate intrest) for the next 20 years.
In such a situation, you will have to pay interest of Rs 43,31,103 on a loan of Rs 40 lakh.
That means in total, you will have to pay Rs 83,31,103.
How money will be recovered through SIP
If you want to recover your home loan, then mutual fund SIP is a great option.
All you have to do is that as soon as the home loan EMI starts, you should start investing in SIP.
Now the question arises that how much money should be invested in SIP every month to recover the cost of the house?
How much should be monthly SIP?
Generally, you should invest 20-25 percent of your EMI in SIP.
You can decide the SIP amount according to the home loan EMI calculation given above.
If your EMI till now is Rs 34,713, then you can put about 25 per cent of it i.e. about Rs 8678 in SIP every month.
If you can get annualised return of 12 per cent on this, your total investment in 20 years will be Rs 20,82,480, on which you may get long-term capital gains of Rs 65,87,126.
In this way, your total corpus will be Rs 86,69,606.
Benefit of SIP plus home loan EMI
If you start SIP along with home loan, then by paying an EMI of Rs 34,713 every month for 20 years, you will pay approximately Rs 83,31,103.
At the same time, by paying Rs 8678 every month in 20 years, you will pay a total additional amount of Rs 20,82,480.
The corpus you will generate from this additional payment (Rs 86,69,606) will be more than your entire home loan.
So how much is your house effectively worth?
You paid a total of Rs 83,31,103 in 20 years by taking a home loan.
Also invested Rs 20,82,480 through SIP.
That means your total investment becomes Rs 1,04,13,583 (about Rs 1.04 crore).
Your total corpus through SIP will be Rs 86,69,606.
In this way, the effective price of your house will be Rs 17,43,977.
Meaning, if you do home loan and SIP together in a smart way, then you will get a house worth Rs 50 lakh for just Rs 27.43 lakh.
This also includes the Rs 10 lakh that you invested from your own pocket while buying the house.
