Hi Sir, Am 44 years. I got 30lakhs from property sale as my share. Currently having home loan balance of 32lakhs for next 13years. Should I repay home loan and invest that EMI amount in mutual funds? Suggest me please.
Ans: You are 44 years old. You have received Rs. 30 lakhs from a property sale. You also have a home loan of Rs. 32 lakhs with 13 years left. You are thinking whether to repay the home loan or invest the money.
Let us evaluate both choices. You are in a very important phase of life. You have just 13–16 years to retire. This decision can impact your financial freedom.
Let us do a full 360-degree analysis.
Understanding Your Current Situation
You are 44 years old
You got Rs. 30 lakhs lump sum
You have a home loan of Rs. 32 lakhs
Tenure remaining is 13 years
EMI is assumed to be around Rs. 30,000–35,000
This is a turning point. What you do now will shape your next 20 years.
Pros of Repaying the Home Loan Now
You will become debt-free
EMI burden will go away
Mental peace and sleep improve
You can use EMI for investment
You reduce total interest outgo
Repaying home loan now reduces pressure in future. Especially post-retirement.
It also removes dependency on job.
If something happens to job, no EMI stress.
Cons of Repaying the Loan Now
You lose lump sum liquidity
You may miss higher returns from mutual funds
You lose tax benefits on interest and principal
Loan is closed, but investment growth stops
Once the money is used for loan, it is gone. You can’t pull it back easily.
So we need to evaluate not only emotion but numbers and flexibility.
Pros of Investing the Rs. 30 Lakhs
You get compounding benefit
You can invest in actively managed equity funds
Long-term SIP or STP gives solid growth
You can create future wealth
If the investment gives 12% CAGR over 13 years, the returns may be higher than loan interest.
But growth is not fixed. Equity has ups and downs.
Also, you still have to pay EMI every month.
Cons of Investing and Not Closing the Loan
EMI will continue
Loan will affect your cash flow
Any job loss or illness becomes risk
Mentally, loan feels like a burden
If your income is stable and surplus is high, you may continue loan.
But if income is not guaranteed, debt can disturb your peace.
What to Choose? Loan Repayment or Investment?
Let us see key questions before choosing:
1. Do you have emergency fund?
If no, keep Rs. 3–4 lakhs aside
Never use entire Rs. 30 lakhs to close loan
Always keep 6–12 months buffer
2. Do you have term insurance and health cover?
If not, arrange this before repaying loan
Without protection, family becomes exposed
Use Rs. 50,000–Rs. 1 lakh to cover this
3. Is your job stable? Income regular?
If yes, then partial prepayment + investment is best
If income is risky, full prepayment brings safety
4. Are you mentally stressed due to EMI?
If yes, better to close loan
Peace is more valuable than returns
5. Is this your only property?
If yes, better to own it fully
No one wants to retire with loan on house
Suggested 360-Degree Action Plan
Let’s break Rs. 30 lakhs into 3 parts:
1. Rs. 20 lakhs – Prepay Home Loan
This reduces EMI significantly
Your loan term reduces by 6–7 years
You become close to debt-free
You also save interest
After this step, balance loan is Rs. 12 lakhs
New EMI will be lower or tenure will reduce
Choose “reduce tenure” option with bank
This keeps EMI same and finishes loan early
2. Rs. 8 lakhs – Invest in Mutual Funds
Start monthly STP from liquid fund
Move into equity funds over 12–18 months
Use actively managed funds with strong track record
Avoid index and direct funds
Actively managed regular plans give better review and guidance
Direct funds give no review support and create confusion
Invest only through trusted MFD with CFP
Build corpus for retirement, child’s goal or wealth creation.
This brings growth along with debt reduction.
3. Rs. 2 lakhs – Emergency and Health Safety
Keep Rs. 1.5 lakhs in liquid fund
Use Rs. 50,000 for health/term cover if needed
Always have this buffer
Mutual Fund Growth vs Loan Savings
Many people compare loan interest (say 8%) and MF return (say 12%).
But that is not the full story.
Loan saving is guaranteed.
MF return is not guaranteed.
You must balance both growth and safety.
If you close full loan, you lose future compounding.
If you don’t close loan, you stay under EMI pressure.
Best option is partial loan closure with partial investment.
This gives the best of both.
Tax Benefit Confusion
Home loan gives Section 80C and Section 24 benefit.
But if you don’t need those benefits, it is not worth keeping loan.
Also, in new tax regime, you may not get any tax benefit.
Check your tax regime before deciding.
If in new regime, better to close loan partly.
Final Insights
You are at 44. You still have 13–16 working years left.
You have got a golden chance with Rs. 30 lakhs.
Use this smartly to reduce pressure and grow wealth.
Don’t use full amount for loan or full for mutual fund.
Balance both to create a flexible financial plan.
Avoid using the full amount emotionally.
Also, do not invest in index funds or ETFs.
They only copy the market and give average returns.
Instead, use actively managed funds for long-term wealth.
Don’t go for direct funds also.
They give no service or correction support.
Use regular funds through a Certified Financial Planner.
Do not take new real estate options now.
They add pressure, not peace.
Secure your family with insurance.
Keep emergency fund untouched.
Build your investment plan slowly and steadily.
This strategy will help you be debt-free and wealthy before retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment