In our country, having one’s own home has many more implications than simply putting a roof over one’s head. Owning a home that is completely paid for and in your own name brings with it social value and prestige to hold our heads high.
However, because buying a home in urban areas is next to impossible without home loans, the process of actually “owning” the home typically takes 20+ years. This time is spent in paying off the loan’s primary and interest amounts.
Let’s look at some standard home loan numbers before continuing:
- Loan Amount: Rs 30 lakhs
- Interest Rate: 8.75%
- Time Horizon: 25 years
And here are the calculations for the repayment of this loan:
- Principal Amount: Rs 30,00,000
- Interest Amount: Rs 43,99,200
- Total Loan Amount: Rs 73,99,200
How to “Guarantee” Interest-free Loans?
In the above example, you can see that you are paying Rs 44 lakhs as interest for a home loan of Rs 30 lakhs. This is a huge sum – almost 1.5 times the primary loan amount!
The question that comes to mind is: How do I reduce my home loan interest outgo? At OneInsure, we go one step further. We ask:
Do you want to make your home loan interest-free?
There is a simple way to completely cancel out the heavy burden of interest amount payments. It’s a formula that is “guaranteed” to work! This is the formula:
Run a parallel guaranteed investment that recovers all the interest paid
If you are thinking this is an additional financial burden, you are in for a pleasant surprise. Here are some numbers for an investment in a money-back plan that has guaranteed returns:
- Investment amount: Rs 3,600 per month
- Term: 30 years (loan term + 5 years)
- Presumed rate of returns: 7% (on the lower side)
- Guaranteed returns: Rs 44,17,515
That’s right, for a sum as low as a few thousand Rupees, a guaranteed plan completely recovers the financial loss of such high home loan interest repayments.
Why SIPs Do Not Work in This Scenario?
Here are the reasons this formula will not work with SIPs:
- SIPs are not guaranteed. Therefore, they cannot be relied upon to give favourable returns when you want to withdraw this amount. In short, you cannot plan in a concrete manner based on SIPs alone.
- The LTCG tax on SIP withdrawals is currently 10%. This means that on profits of Rs 40 lakhs, Rs 4 lakhs has to be paid as tax!
- No life cover in SIPs. Guaranteed plans come with life covers that will protect your family in case the worst happens and you are no more.
Suggestion: You must consider term plans in order to completely protect your family against home loan repayments.
Here’s how you reach OneInsure financial experts in case of queries:
- M – 86559-86559
- E – firstname.lastname@example.org