Every middle-class person dreams of owning a house. To make this dream real, people take a big home loan. Then the EMI starts, which takes a large part of their monthly salary. Many people pay EMIs for 20–25 years and end up paying double the price of the house.
Now the question is — can you reduce the cost of your house? The answer is yes. You can do it with a mutual fund or SIP. If you invest a small amount in an SIP while paying your home loan, after 20 years you can get your house almost for free and also make a profit.
Understand the home loan example
Suppose you buy a house worth ₹50 lakh. You take a loan of ₹40 lakh and pay ₹10 lakh from your pocket. The loan time is 20 years, and the interest rate is 8.5%. Your monthly EMI will be ₹34,713. You will pay this amount every month for 20 years. In total, you will pay ₹83,31,103. This means you borrowed ₹40 lakh but paid back more than ₹83 lakh. That is why many people feel a house bought with a loan becomes too costly.
How to Recover Money Through SIP
To cover the cost of your home, start a small SIP along with your EMI. Experts say you should invest 20–25% of your EMI every month.
If your EMI is ₹34,713, invest ₹8,678 (25%) in an SIP every month.
Let’s assume your SIP earns an average return of 12%. Here’s how it works:
| Parameter | Value |
|---|---|
| Monthly SIP | ₹8,678 |
| Tenure | 20 years |
| Total Investment | ₹20,82,480 |
| Estimated Return (12%) | ₹65,87,126 |
| Total Corpus | ₹86,69,606 |
After 20 years, you will have around ₹86.69 lakh from your SIP.
Combined Effect of Home Loan and SIP
Now, let’s see the full picture:
You repay ₹83,31,103 under the home loan.
You invest ₹20,82,480 in SIP.
So, your total payment is ₹1,04,13,583.
Your SIP gives you a corpus of ₹86,69,606.
If you subtract this amount, the effective cost of your house becomes only ₹17,43,977.
Since you already paid ₹10 lakh as a down payment, you got a ₹50 lakh home for about ₹27.43 lakh.
This is called a Smart Home Buying Strategy.
If you plan your money wisely, a home loan can become profitable. SIP gives you the power of compounding, which helps your money grow while you repay your loan.
When and How to Start SIP
Start SIP the same month you pay your first EMI.
Set it on auto-debit so it continues every month.
Choose long-term funds like equity mutual funds.
Stay consistent and don’t stop in between.
Small Investment, Big Gains
The link between home loan EMI and SIP is like exercise and diet — doing both gives better results.
If you start investing ₹8,000–₹9,000 every month with your EMI, you can build a corpus equal to your house’s value in 20 years.
And if you stay invested for the long term, this money will also be tax-free.
Buying a house is a good decision, but investing along with it makes it even better. If you invest a small part of your salary every month in SIP while paying your home loan, you will get your home not only for free but with profit.
Remember — wealth is created not only by earning but also by planning.