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:
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You repay ₹83,31,103 under the home loan.
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You invest ₹20,82,480 in SIP.
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So, your total payment is ₹1,04,13,583.
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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
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Start SIP the same month you pay your first EMI.
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Set it on auto-debit so it continues every month.
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Choose long-term funds like equity mutual funds.
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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.