I have a home loan of 63 lakhs, current Emi 90 k per month.Want to repay it within 8 years. I am 45 years old with a Lic of 10 k, 35 k Mutual fund every month. How to increase my savings while paying the loan.My current salary is 2.70 per month.
Ans: You are earning well and saving regularly.
You are managing a large loan but still investing. That is very good.
Let us create a 360-degree action plan.
This will help you close the home loan in 8 years.
Also, it will help you grow savings comfortably.
Understanding Your Current Structure
Your home loan is Rs 63 lakhs. EMI is Rs 90,000 every month.
Your salary is Rs 2.7 lakhs per month. This gives you a strong income base.
You are investing Rs 35,000 monthly in mutual funds.
You are paying Rs 10,000 per month in LIC premium.
Total committed outflow: Rs 1.35 lakhs every month.
You are saving over 45% of your income. That is very good.
Your EMI is 33% of your income. This is acceptable and manageable.
Let us now check how to optimise this better.
Check the LIC Policy Closely
You are paying Rs 10,000 per month into LIC. That is Rs 1.2 lakhs yearly.
Most LIC policies are insurance-cum-investment. They give low returns.
These returns are around 4% to 5%. This is below inflation.
If the policy is not near maturity, think of surrendering.
Get the current surrender value from the branch or online.
If losses are not too high, consider exiting it.
Move that Rs 10,000 per month into mutual funds.
That will improve your long-term returns significantly.
A Certified Financial Planner can guide on policy exit timing.
Review Mutual Fund Investments in Detail
You are investing Rs 35,000 every month. That is excellent.
But are you investing in regular plans or direct plans?
Direct plans offer no personal advice or fund strategy support.
Choosing funds alone in direct plans may reduce long-term returns.
Many investors pick underperforming funds in direct plans.
Instead, invest in regular plans through a CFP and MFD.
Certified Financial Planners give a structured portfolio approach.
They guide based on your age, risk, and goals.
Also check if your current funds are active or index-based.
Index funds just copy the market. They don’t beat inflation well.
Actively managed funds perform better over long periods.
They can shift strategies as per market changes.
Index funds stay passive even during downturns. That is a risk.
If you are holding index funds, consider switching.
Shift gradually to active funds with CFP guidance.
Home Loan Repayment Strategy Over 8 Years
You want to close the loan within 8 years. That is a smart decision.
Prepaying your loan reduces total interest cost significantly.
Continue your regular EMI of Rs 90,000 monthly.
Apart from this, plan for yearly prepayment.
Target to prepay around Rs 2 lakh to Rs 4 lakh per year.
Use bonuses, gifts, or matured FDs for this prepayment.
Even partial prepayments reduce your loan tenure quickly.
Don’t stop SIPs for prepayment. That will hurt long-term savings.
Instead, cut unnecessary monthly expenses for extra savings.
Any salary hike can also be channelled to loan prepayment.
If you follow this, you can close the loan in less than 8 years.
After closing, you can invest that Rs 90,000 EMI into mutual funds.
That will grow into a strong retirement corpus.
Tighten Expenses to Boost Savings
Track your monthly expenses honestly.
Split them into essential and optional categories.
Look at areas like eating out, entertainment, and gadgets.
You may find Rs 10,000 to Rs 15,000 per month to save.
Redirect that into SIP or yearly prepayment.
Even Rs 5,000 extra SIP every month has big future value.
Also create a “prepayment reserve” from gifts or side income.
Use that pool only for reducing loan balance every year.
Control spending through digital tracking apps or a handwritten logbook.
Involve family in this savings habit. That keeps motivation high.
Maintain Emergency Fund and Risk Cover
Don’t compromise your emergency fund while repaying the loan.
Keep at least 6 months of monthly expenses in a safe place.
This includes EMI, SIPs, and monthly costs.
Ideally keep Rs 6 lakh to Rs 8 lakh as emergency backup.
Health cover for all family members must be active.
Also take Rs 50 lakh to Rs 1 crore term insurance.
This protects your family if something unexpected happens.
Many ignore risk cover when focusing on EMI. Don’t make that mistake.
These protections should not be compromised under any condition.
Do not use emergency fund for loan prepayment. That is dangerous.
Asset Rebalancing After Loan Closure
Once your loan ends in 8 years, your EMI becomes free.
That is Rs 90,000 monthly ready for new goals.
Shift this full amount into mutual fund SIPs.
Let it grow for your retirement and daughters’ education.
Continue till age 60 or 65. Your corpus will grow big.
Mutual funds give flexibility, liquidity, and better growth.
Don't fall for new insurance policies again later.
Stay focused on goal-based investing only.
Your future self will thank you for this discipline.
Taxation Planning Alongside Investments
New mutual fund rules affect capital gains tax.
Equity mutual funds: LTCG above Rs 1.25 lakh taxed at 12.5%.
Short-term gains are taxed at 20%.
Debt fund gains taxed as per your income slab.
So, hold equity funds long term. Avoid frequent switches.
Avoid large one-time redemptions unless needed.
Plan exits with a Certified Financial Planner. They help reduce tax impact.
Stay within limits to reduce tax liability smartly.
Your Year-by-Year Action Plan
Year 1 to 3
Review LIC. Exit if not near maturity. Shift to mutual funds.
Track expenses. Identify Rs 10K to 15K extra to save.
Build Rs 2 lakh yearly for prepayment.
Increase SIP by Rs 5K if possible.
Maintain health and life insurance.
Avoid new loans or unnecessary spending.
Year 4 to 6
Continue Rs 90K EMI. Also continue Rs 35K to 40K SIP.
Prepay Rs 3 lakh to 4 lakh every year if income allows.
Get regular portfolio reviews from your CFP.
Increase SIP if your salary grows.
Avoid real estate, gold, or new insurance products.
Year 7 to 8
Finalise last loan payments. Close it completely.
Get loan closure certificate. Keep it safe.
Plan to invest Rs 90K EMI as SIP every month.
Shift focus fully to retirement and future needs.
Reassess goals and re-align mutual funds accordingly.
Finally
You are already doing many things right.
You earn well. You save. You invest. You plan ahead.
Only fine-tuning is needed.
Close LIC if it is not helpful. Shift to mutual funds.
Avoid index funds and direct plans.
Choose active mutual funds through CFP-guided regular plans.
Prepay home loan every year without stopping SIPs.
Avoid lifestyle inflation. Use income growth wisely.
Stay insured and keep emergency fund untouched.
By 53, you will be debt-free and financially strong.
After that, you can invest big and retire comfortably.
Let your money work for you, not the other way around.
Best Regards,
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K. Ramalingam, MBA, CFP,
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Chief Financial Planner,
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www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment