Does the thought of owning your dream home excite you, while at the same time the thought of having to pay large sums of money as interest scare you off? Regrob has a jackpot for you.
How about having a home loan at 0% interest rate? No we are not kidding. We are here and we are going to tell you how you can take a home loan at 0% interest rate. So what are you waiting for? Read further and know how you can get your dream home loan at 0% interest rate.
Buying a property means long-term commitment by way of monthly EMI payments. The EMI amount is not a very small one, and hangs like a sword above our heads. But that has never restricted most of us anyway. We are willing to take a 10-year loan and pay our huge EMIs persistently, and ensure that we never miss a payment. Right? So now let us consider a scenario.
This same discipline, this same giving of good sums, this same long-term limit is not present when it comes to our mutual fund investments. Here, we hesitate to commit a fixed sum. We are under-invested, content to put in small sums of just Rs. 1,000 or Rs. 2,000 a month, even while we commit over ten times of this to our EMIs. Because somehow the idea of investing in a mutual fund is still alien to us.Click here to read about Should i fix my home loan
So, what if we compare a house investment with a mutual fund investment? If, instead of paying your EMI, you had been investing in mutual funds, what would you have ended up with?
Much richer, we believe. Yes, you would save a lot more money had you invested even less than 1/5th of the home loan EMI. You could get back all the money you paid in principle and interest towards your home loan at the end of the term, effectively reducing your EMI to 1/5th of your original amount.
We advise that you should set up an SIP which automatically deducts 20% of EMI on the same date as that of your home loan. You won’t even notice it, but will be elated when you receive the big fat paycheck at the end of those 20 years. Don’t quite believe it yet? See the example below and know for sure.
Let us illustrate how home loan outflow can be recovered by doing an SIP of 19% of the total home loan EMI amount.
Say, the EMI paid per month for the home loan is 19,888.
The tenure of the home loan is 20 years.
The home loan rate is assumed to be 9.9%.
The principal amount to be repaid is Rupees 20,00,000.
The interest amount repaid comes out to be Rupees 28,00,000.
Hence, the total outflow is a whopping Rupees 48,00,000. Seems like a pretty costly affair to us. But moving on, let’s observe what happens when you invest in an SIP.
Say the monthly amount of your SIP is Rupees 3,700. Much less as compared to the EMI amount.
The assumed annualized rate of return from this SIP is 14%.
The tenure of the SIP is same as your home loan, 20 years.
At the end of 20 years, you will have a return of Rupees 48,14,314 from your SIP. Which clearly is a lot more than your payment on the home loan! Isn’t this an exciting prospect to consider? We surely think it is. By doing an SIP of just Rupees 3,700 per month for the same amount of time as your home loan, you recover an amount over and above your home loan.
It is a win win situation for all of us. For you because of the saving, for us because you are happy. This is our jackpot advice to you if you want to save big and effectively reduce your home loan interest rate to 0%. It is a smart move and helps you save a hefty sum of money which you would otherwise be paying as interest. So start your SIP now and enjoy an interest free home loan! Click here to read about SIP vs EMI in Home loan
The only thing you must keep in mind is that, patience is the key. Yes, you should have the patience and the ability to commit high sums for a long period of time, like you do with your EMI and you would be able to build a far superior corpus for your long-term goals. Secondly, you need not be in a hurry to take a loan and buy a house in your initial years of high saving. So this completes our advice on how to get a home loan at 0% interest rate.
We wish you all the luck on making this smart decision and getting a good deal with lots of saving. For more help, head to Regrob!
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