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Sanjeev Govila |282 Answers |Ask -Follow

Financial Planner - Answered on Sep 20, 2023

Asked by Anonymous - Aug 24, 2023Translate

Money

I want to pay off my home loan of 60 lakhs in 10 years or less. I am a salaried employee. My current EMI is 55,000 pm for a period of 15 years. Can you please share some options? How much to invest and where to invest?

Ans: Assuming you have a healthy cash flow, and your income will also increase over the period, the following actions will be very helpful for you to pay off your liability at the earliest.

1. To pay off your home loan of 60 lakhs in 10 years or less, you will be requiring to increase your EMI by around 50%. This means your EMI will increase to around 82,500 pm.

2. If you are not able to afford this increase, you can consider making lump sum prepayments towards your loan whenever possible. For example, if you can prepay 10 lakhs each year, you will be able to pay off your loan in 10 years. Making extra lump sum payments on regular intervals, as it will help you to cut down many years from your loan term.

3. Refinance your loan by shorter duration to complete the payment in desired time frame.

4. You can also invest your extra surplus towards some aggressive equity funds or into any index funds (as per your risk appetite). Once your investments have grown well, you can utilize the accumulation to pay-off the loan after few years.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Ans: To create a corpus of 1.75 crs (loan outstanding in 7 years) in 7 years the SIP or monthly Instalment required is Rs. 1,25,000.

Total loans EMI should not be more that 50% of the Monthly net salary / Income

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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