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Home Loan+SIP Investment: Repaying a home loan may be the only financial goal on your mind when you are in its process, but making an investment simultaneously can cover a large amount of the loan. While repaying the home loan, if you take an extra little effort to create a corpus, it may cover more than half the loan amount. And for that, you may not have to invest hugely in an SIP. An investment equal to 10 per cent of your home loan EMI may make it happen.

Here, we will show you how you can create an Rs 1.16 crore corpus while repaying your Rs 75 lakh, 25-year home loan. 

Home loan repayment 

When you repay a home loan, its interest rate and tenure determine the interest amount you pay during the repayment period.

Let's see the example of an Rs 50 lakh home loan taken at a 10 per cent interest rate and see how the interest amount differs if you take it for 15, 20, or 25 years.

In 15 years, the estimated EMI will be Rs 52,211, the estimated interest will be Rs 43,98,022 and the estimated repayment will be Rs 93,98,022. 

In 20 years, the estimated EMI will be Rs 46,607, the estimated interest will be Rs 6,185,574, and the estimated repayment will be Rs 1,11,85,574. 

In 25 years, the estimated EMI will be Rs 43,685, estimated interest will be Rs 81,05,450 and the estimated repayment will be Rs 1,31,05,450.

You can see that a 10-year gap can make a difference of over Rs 37 lakh in interest.

SIP investment for long term

The reverse trend takes place in an SIP investment. Here, the longer duration helps your corpus grow faster. 

Compare a situation when you make an Rs 10,000 SIP investment for 15 years and 30 years and get a 12 per cent annualised return in each case. 

In 15 years, the total investment will be Rs 18,00,000, estimated capital gains will be Rs 29,59,314, and the estimated corpus will be Rs 47,59,314.

In 30 years, the total investment will be Rs 36,00,000, estimated capital gains will be Rs 2,72,09,732, and the estimated corpus will be Rs 3,08,09,732.

How to apply same thing in home loan+SIP investment 

Now take the example of an Rs 75 lakh home loan at 10 per cent interest for 25 years.

In 25 years, the estimated EMI will be Rs 68,153, the estimated interest will be Rs 1,29,45,767 and the estimated repayment will be Rs 2,04,45,767.

SIP corpus in 25 years

Now what you need to do is to run a parallel monthly SIP investment, which will be equal to 10 per cent of the EMI amount. 

Since the EMI amount is Rs 68,153, the monthly SIP investment will be Rs 6,816. The expected annualised return from the investment is 12 per cent. 

In 25 years, the total investment will be Rs 20,44,800, estimated capital gains will be Rs 95,57,440, and the estimated corpus will be Rs 1,16,02,240.

It shows how with a little extra effort of SIP investment, you can create an estimated corpus of over Rs 1.16 crore, which can cover more than half your Rs 75 lakh, 25-year loan repayment amount.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)