HOW TO TURN YOUR HOME LOAN INTEREST-FREE?
Namaste and Greetings
Would you like to make your loans INTEREST FREE?
Would you like to get back all the Interest Paid to the Bank at the end of your Home Loan Tenure?
Yes….
It's definitely possible to make your Home Loan free.
Interested?
Let's understand how to do it
Having your own HOME is a DREAM for every Middle-Class person.
Our earlier generation used to work throughout their career, accumulate their hard-earned money, and at the end of retirement, the period used to have their own home.
But this generation is lucky that they can dream and actually have their OWN HOME due to the easy availability of Home Loans.
And due to peer pressure, even youngsters who have just started to earn dream of having their own home.
And we all know that Home Loans tend to be huge and come with big interest costs.
So when you do get your own dream home, you are very happy but the happiness gives way to a bit of stress and tension.
Why?
Because you have to pay monthly EMI.
And friends, do you know, you end up giving MORE amount via EMI to the Bank than the amount you have taken as Loan.
For example :
Suppose you take a Rs.50 lakh loan at 8% interest
for 20 years, the EMI will be Rs.41,822 and total repayment = Rs.1,00,37,281
for 25 years, the EMI will be Rs.38,591 and total repayment = Rs.1,15,77,243
for 30 years, the EMI will be Rs.36,688 and total repayment = Rs.1,32,07,762
the EMI reduces when you increase the tenure of the loan
but whatever the tenure…the sad reality is that you end up paying MORE than your loan amount to the Bank and this is called INTEREST.
Today WEALTHY HABITS readers will be shared a secret on how to GET BACK THIS INTEREST AND MAKE YOUR HOME LOAN INTEREST FREE
Even if you don’t like Mathematics, seeing the formula we are sharing you will start loving Mathematics !!
WHAT YOU NEED TO DO?
Very simple.
Friends, you need to THINK / ASSUME that your EMI is 10% more (if you w
Meaning, if your EMI is Rs.20,000 you need to think it is Rs.23,000
or
If your EMI is Rs.25,000, you need to think it is Rs.28,750
Now this extra 10% you shouldn't give to Bank but you need to INVEST in Mutual Fund through a SIP (monthly Systematic Investment Plan)
Make sure to invest in that product/fund where the returns are expected to be MORE than your Bank Loan Interest.
Now you may say, “I am already paying so much EMI, how can I afford another 10%”
Well dear friends, when you go to Bank for EMI and bank says 8% and after coming home, taking friends and family advise, completing all paperwork and go to Bank again and now they say “Interest is not 8% but 9%”
Will you then cancel the purchase of your Dream Home?
No….You will definitely tell yourself….
“Somehow I will manage and arrange this extra 10%”
Isn't it?
You may feel awkward that instead of helping to reduce interest we are talking here of MORE interest.
As we said earlier….you need to INVEST THIS ADDITIONAL 10% AMOUNT IN FUNDS WHICH HAS POTENTIAL TO GIVE RETURNS MORE THAN YOUR HOME LOAN
Now…suppose you take a Home Loan of 50 lakhs for 30 years at 8% interest, then your EMI will be Rs.36,688
Now 10% of this will be Rs.3,700 (rounded off)
You need to INVEST THIS Rs.3700 in a Mutual fund.
With our more than 3 decades of experience and long-term return proof, let's assume that your investment of this additional EMI of Rs.3,700 SIP will result in a return of 12% p.a.
Now this will result in OUTGO of
TOTAL AMOUNT PAID FOR 30 YEARS
EMI = 1,32,07,762
SIP = 13,32,000
TOTAL EMI + SIP = Rs.1,45,39,762 is the OUTGO from you
Remember your loan is Rs.50,00,000
which means
Rs,1,45,39,762
-Rs.50,00,000
= Rs.95,39,762 is the INTEREST you have paid
 |
Now let's check how much Rs.3,700 (extra assumed EMI ) invested in Mutual funds at 12% would have grown.
Friends, it would have grown to Rs.1,13,99,601
Total outgo of Rs.1,45,39,762
Amount recd from Mutual fund = Rs.1,13,99,601
Net OUTGO
1,45,39,762
-1,13,99,601
= 31,40,000
You had taken a Loan of Rs.50,00,000
but due to OUR FORMULA, you have paid only Rs.31,40,000
NOT ONLY DID YOU RECEIVE YOUR ENTIRE INTEREST AMOUNT BACK BUT AS A BONUS YOU ALSO RECEIVED SOME AMOUNT OF PRINCIPAL TOO !!
How did this magic happen?
Just by a simple formula of assuming/thinking that you are paying 10% extra EMI
BY THE WAY, IF YOU ASSUME AND CAN INVEST 15% OF THE EMI AS SIP IN EQUITY MUTUAL FUNDS THEN YOU WOULD EASILY BE ABOVE WATER
AS YOU CAN SEE FROM THE ABOVE IMAGE, YOU COULD ACTUALLY END UP HAVING MORE MORE THAN YOUR TOTAL INTEREST PAID PLUS THE PRINCIPAL WHEN YOU INVEST 15% OF THE EMI.
In fact, in the above image, I have assumed Home Loan at 11% (as worst-case scenario)
This is not magic my friend, but pure REALITY in front of you.
Friends, this monthly SIP amount is indeed small but because you are giving a long time of 30 years, the COMPOUNDING MAGIC helps in making it such a big amount that it not only made your HOME LOAN Interest Free but also helped you get back some Principal amount!
In India,, as soon one gets married, the pressure to have an OWN home starts and the majority get sucked into the EMI trap and forced to mentally shut out all the other saving options due to mounting expenses.
But following our formula, you can not only have your dream home but also recover all the interest you have paid.
All you need is some discipline of setting a small portion of your income along with your EMI payments.
And yes, do not forget, since equity mutual funds are market-linked, you will have to contend with the volatility in the interim period.
You are strongly advised to consult with a Financial Expert or a Mutual Fund Distributor and make a considered decision.
Regards,
Srikanth Matrubai
P.S. I would like to thank my mentor JIGAR PAREKH for the idea
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This comment has been removed by a blog administrator.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteThank you for making the math look so easier. Very useful information.
ReplyDeleteSir,
ReplyDeletewhat about rent that we will have to incur the whole life before buying the dream home.?
How much percentage does the rent grow ?
DeleteMax 5 to 6%
what about the Investments?
And also remember once you take EMI, you are STUCK
You cant even quit your job even it is not good because you have to pay your EMI !!!