How Can I Recover My Home Loan Interest From SIP?


A home loan is a simple way to buy the home of your dreams and repay it comfortably through Equated Monthly Installments (EMIs). 

Given that urban property prices are particularly high, many buyers have loans with terms between twenty and thirty years. The cost of the interest on these long-term mortgages can occasionally be higher than the cost of the loan itself and more than double the amount that must be repaid. 

Are there any ways to lessen or offset this interest burden over the long term, aside from paying off the principal sooner?

Start a Systematic Investment Plan (SIP) in equity mutual funds or index funds, according to experts, to resolve this issue. Borrowers can recover the entire cost of their home loan if they begin a SIP equal to 10% of the monthly installment payment as soon as their home loan EMI is due.

On a Rs 30 lakh home loan for 25 years (at 6.75 percent interest), an individual has to repay about Rs 62 lakh which is more than double the principal amount. 

In addition, by investing just Rs 6 lakh (10% of monthly installment) in mutual fund SIPs over a 25-year period, one can accumulate a corpus of about Rs 66 lakh (with an estimated return of 15 percent p.a. It’s always a good idea to start a SIP if one has extra money after paying all of their bills.

This could be used as a set-off for the interest on the home loan and would help with saving more money than fixed deposit returns. However, because investments in mutual funds are subject to market risk, it is advised that investors assess the fund they would like to invest in based on their immediate and future needs for lump sum cash.