With ₹10 Lakh In Hand Should I Prepay Home Loan Or Invest In Mutual Funds In 2022?

If you have 10 lac rupees in hand, you will always find it difficult to choose between loan prepayment or investment. While you decide to prepay, someone else will go for investments. 

Therefore, it is important to choose the right purpose before you actually put your money to use. Prepay your housing loan or invest in mutual funds only after considering the advantages given below.

The advantages of paying off your home loan

• When you pay off your home loan, you actually reduce the financial burden every month. The home loan EMI amount is definitely not going to be a small amount of money. If you pay off the loan, you can actually save a lot of money every month. When you stop paying the monthly EMI amount, you can use that amount for other things as well. It becomes a financial obligation every month to pay the housing loan EMI amount to the home loan providers. Therefore, if you have 10,00,000 in hand, it is good that you pay your home loan and free yourself from every month's financial burden.

• You don’t have to pay an extra rate of interest every month. When you keep your housing loan account open, you need to pay an extra rate of interest every month. When you pay off using the 10 lakh rupees that you have, you can actually stop yourself from paying an extra amount of money every month. This rate of interest can be used for other essential expenses in your daily activities.

• You can be completely free from any kind of debt burden. Your debt to income ratio will be low, and you will eventually be ready to take any kind of other loan at the time of need or emergency. Till the time you end up paying your housing loan, you will not be able to take any kind of emergency loan during a crisis. Therefore, by paying off your housing loan, you can be free to borrow at the time of need.

• Give wings to your wishes and aspirations by getting away from the housing loan burden. If you don’t have to pay your monthly amount, you can actually use the amount for travelling or purchasing anything that you want.

The advantages of investing in mutual funds

• When you invest 10 lakh rupees in mutual funds, you are actually securing your future. Mutual funds are good investments where you can double your money in a few years. It is a good piece of financial security that can help you with various kinds of financial crises and emergencies. If you have a surplus amount, it is always safe to invest so that you can grow your money.

• Mutual funds can assist you in meeting large-ticket expenses such as international studies or weddings. It is always a safe option to keep investments so that you can meet the expenses of big-ticket items. Weddings or studies abroad can be very expensive in India. If you have mutual funds, it makes it easier for you to handle all the expenses.

You can connect with your financial advisor for a better decision. Home loan approval completely depends upon the eligibility criteria imposed by home loan providers. Apply for a home loan only when you are able to meet the eligibility criteria or loan requirements.