The end of the financial year is just around the corner, that time when we are waiting for a work performance incentive. But have we decided on how to use this surplus money effectively? Facing the same dilemma is Sunaina, a 36-year-old IT professional earning a monthly salary of ₹1 lakh. Expecting a bonus of ₹2 lakh, she needs clarification on whether to repay a part of the home loan or invest in equities.
Sunaina took the home loan about three years back for ₹30 lakh at 7 per cent interest and a tenure of 15 years. She currently pays an EMI (equated monthly instalment) of ₹27,000. In addition, she is divided on which tax regime – the new or the old – suits her best. But let’s tackle the home loan-versus-equity question first.
Impact of home loan interest rate hike
Currently, Sunaina’s loan interest rate has jumped to 9 per cent. The rising interest issue might have also affected you in the last couple of years. Let’s understand why: these days, banks give home loans linked to the repo rate. (Repo rate is the interest rate at which the RBI lends money to commercial banks). It means when repo rates increase (which has been happening since last May), so do our home loan interest rates.
When home loan rates increase, banks stretch the tenure period, not the EMI amount. Therefore, in Sunaina’s case, her EMI amount will remain the same (roughly ₹27,000), but the loan duration will extend from 15 to 18 years. However, please note that the loan duration may extend greatly if you are:
a) in the initial stages of a home loan, and
b) if the loan interest rate has increased considerably.
Denne historien er fra April 2023-utgaven av Mutual Fund Insight.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra April 2023-utgaven av Mutual Fund Insight.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
International Mutual Funds Find Flavour But Lose Favour
Despite stellar performance, these funds are cold-shouldered by investors
The Dose Makes The Poison
Are your fund investments diversified? Or are they diworsified? Here’s the solution
'Since Sahi Hai drive launch, industry has grown over twofold'
The AMC’s marketing and corporate communication head also lauds MFCentral and MF Utility
'Earlier, not many knew of mutual funds; now SIP is a verb'
The CMO also explains how 4G, fintechs have elevated mutual funds’ reach
'MFCentral is the most impressive of online platforms'
Shah says though passive funds are growing, there’s a long road ahead
'Fintechs are driving mass financial inclusion'
Shah also lauds the pace at which distributors have embraced technology
'A Maldives tour guide knew of the Mutual Fund Sahi Hai drive'
Interaction with Edelweiss’s senior VP and head of products and marketing
'More distributors will come to MFCentral, MF Utility'
Goyal feels they can grow their business five times, 10 times with tech
'The size of passive funds has grown 36 per cent in a year'
Parija explains how mutual funds have gained traction
Tomorrow, and tomorrow, and tomorrow...
There are a total of about 1.1 lakh crores of rupees invested in India’s mutual funds and the number of investors is now about 12 crore
