Mutual Funds SIP: Solution for an interest-free loan

The Solution — Recover the interest amount you will pay by investing in mutual funds By starting a SIP of 0.16% of your home loan amount in an equity mutual scheme, you can recover the interest amount.

Example:

Home loan amount of ₹ 40 lakhs | Interest 9% | EMI ₹ 35,989

Tenure of 20 years |You end up paying ₹ 86.37 lakhs | Interest Paid ₹46.37 lakhs

Solution Steps:

Monthly SIP of ₹ 6400 (0.16% of the loan amount), 12% average annual return. You gain ₹ 63.31 lakhs in 20 years. Invested amount ₹15.36 lakhs, Profit ₹47.95 lakhs in your hands, which is more than enough to cover the interest you will pay.