Need advice: Should I aggressively prepay my ₹2.35Cr home loan or invest the surplus? [India]
Hi everyone,
I'm 32M, recently took a home loan and trying to figure out the optimal strategy for my surplus income. Would really appreciate your thoughts on this.
My Financial Situation:
Income:
- Monthly Salary: ₹3.5L
- Other Income (rental + side projects): ₹3L
- Total: ₹6.5L/month (₹78L/year)
Expenses:
- Total Monthly: ₹3L (including ₹1.75L EMI)
- Non-loan expenses: ₹50K
- Savings Rate: ~54%
Assets:
- Emergency Fund: ₹30L (10 months of expenses, 60 months of non-loan expenses)
- Liquid Savings: ₹2L
- Investment Portfolio: ₹1.5Cr
- Current SIP: ₹1.3L/month
Liabilities:
- Home Loan: ₹2.35Cr @ 7.5% for 25 years
- EMI: ₹1.75L/month
- Just started in Jan 2025
Monthly Surplus: ₹3L (after all expenses and current SIP)
The Dilemma:
I have ₹3L surplus every month and I'm torn between:
-
Aggressive Prepayment (80-20): Put ₹2.4L towards loan, ₹60K in investments
- Become debt-free in ~10 years
- Save ~₹1.8Cr in interest
- But miss out on compounding
-
Balanced (50-50): ₹1.5L prepayment, ₹1.5L investment
- Debt-free in ~15 years
- Save ~₹1.2Cr in interest
- Build decent corpus
-
Wealth Focus (20-80): ₹60K prepayment, ₹2.4L investment
- Debt-free in ~20 years
- Save ~₹50L in interest
- But carry loan for longer
What I'm Currently Thinking:
I built a simple calculator to run the numbers, and here's what it suggests:
Recommended: 20-80 Split (Wealth Focus)
Reasoning:
- Loan just started (25 years remaining)
- Expected equity returns (12%) > Loan rate (7.5%)
- Post-tax returns still beat loan rate by 2-3%
- Strong emergency fund already in place
- Long time horizon for compounding
Projected Outcome (25 years):
- Investment corpus: ₹10.5Cr (₹3.7L/month SIP @ 12%)
- Interest saved: ₹50L from prepayment
- Net worth: ~₹10Cr
- Loan paid off in 20 years instead of 25
vs Aggressive Prepayment (80-20):
- Loan paid in 10 years
- Interest saved: ₹1.8Cr
- Investment corpus: ₹5.4Cr
- Net worth: ~₹5.4Cr
- ₹4.6Cr less than wealth focus!
My Concerns:
- Psychological: Carrying a ₹2Cr+ loan for 20 years feels heavy, even though math says invest
- Market Risk: What if equity returns are only 8-9% instead of 12%?
- Interest Rate Risk: What if rates go up and I can't refinance?
- Opportunity Cost: Am I being too optimistic about returns?
- Tax Benefits: Currently maxing out 80C (₹1.5L) and getting 24(b) deduction (₹2L interest). Should I factor this more?
Questions for the Community:
- Does the 20-80 split make sense given my profile, or am I being too aggressive with investments?
- Should I consider a dynamic strategy (adjust based on market conditions)?
- Anyone here carried a large home loan while building wealth? How did it work out?
- Am I underestimating the psychological burden of debt?
- What would you do in my situation?
I know the math favors investing when returns > loan rate, but I'd love to hear from people who've actually been through this journey.
Thanks in advance for your insights!
P.S. - I'm in India, so tax treatment is different (80C for principal, 24(b) for interest, LTCG on equity @ 10% above ₹1L). Also, our loan prepayment is more flexible than US (no penalties in most cases).
The ₹2.35 Crore Question: Prepay or Invest? 🏠💰
Just took a home loan and facing the classic dilemma every homeowner deals with:
"I have ₹3L surplus every month. Should I aggressively prepay my loan or invest it?"
Here's my situation: • 25-year loan @ 7.5% • ₹1.75L EMI • Strong emergency fund (10 months) • Already investing ₹1.3L/month • ₹3L additional surplus
The Math:
📊 Option 1: Aggressive Prepayment (80%) → Debt-free in 10 years → Save ₹1.8Cr in interest → Net worth: ₹5.4Cr
📈 Option 2: Wealth Focus (20% prepay, 80% invest) → Debt-free in 20 years → Save ₹50L in interest → Net worth: ₹10Cr
The difference? ₹4.6 Crores!
But here's the catch - carrying a ₹2Cr+ loan for 20 years isn't easy psychologically, even when the math says invest.
My current thinking: Focus on wealth building (20-80 split) because: ✅ Long time horizon (25 years) ✅ Expected returns (12%) > Loan rate (7.5%) ✅ Strong financial foundation ✅ Tax benefits on both sides
But I'm conflicted: ❓ What if market returns disappoint? ❓ Am I underestimating the peace of mind from being debt-free? ❓ Should I use a dynamic strategy instead?
Question for the community: What would you do? Have you faced this dilemma? How did it turn out?
Would love to hear your experiences and perspectives! 💭
#FinancialPlanning #HomeLoan #InvestingVsDebt #PersonalFinance #WealthBuilding #FinancialIndependence
Just took a ₹2.35Cr home loan.
Have ₹3L surplus every month.
The math says invest. My gut says prepay.
Here's the dilemma every homeowner faces 🧵
My situation: • 25-year loan @ 7.5% • ₹1.75L EMI • ₹6.5L monthly income • 54% savings rate • ₹1.5Cr existing portfolio • ₹30L emergency fund
Question: What to do with ₹3L surplus?
Option A: Aggressive Prepayment (80%) • Debt-free in 10 years • Save ₹1.8Cr interest • Net worth: ₹5.4Cr
Option B: Wealth Focus (80% invest) • Debt-free in 20 years • Save ₹50L interest • Net worth: ₹10Cr
Difference: ₹4.6 CRORES! 🤯
The math is clear:
Equity returns (12%) > Loan rate (7.5%)
Even post-tax, investing wins by 2-3%
Over 25 years, this compounds to ₹4.6Cr difference
But...
The psychological burden is REAL:
• Carrying ₹2Cr+ debt for 20 years • What if returns are only 8-9%? • What if rates increase? • Peace of mind vs wealth maximization
Math ≠ Emotions
I'm leaning towards 20-80 split (wealth focus) because:
✅ Long horizon ✅ Strong foundation ✅ Returns > rate ✅ Tax benefits
But I'd love to hear from people who've actually done this.
What would YOU do?
Built a simple calculator to run these scenarios.
If you're facing the same dilemma, might be helpful!
Link in bio 🔗
What's your prepay vs invest strategy? Drop your thoughts below! 👇
The ₹2.35 Crore Question 💰🏠
Swipe to see the math that's keeping me up at night →
Just took a home loan and facing every homeowner's dilemma:
Prepay aggressively or invest the surplus?
📊 My situation: • ₹2.35Cr loan @ 7.5% • ₹3L monthly surplus • 25 years remaining
🎯 Option 1: Aggressive Prepayment → Debt-free in 10 years → Net worth: ₹5.4Cr
📈 Option 2: Wealth Focus → Debt-free in 20 years → Net worth: ₹10Cr
The difference? ₹4.6 CRORES!
But carrying a ₹2Cr loan for 20 years isn't easy, even when math says invest 😅
Currently leaning towards wealth focus (20% prepay, 80% invest) because: ✅ Long time horizon ✅ Returns beat loan rate ✅ Strong emergency fund ✅ Tax benefits both ways
But I'm conflicted...
What would YOU do? 🤔
Drop your thoughts in comments! 👇
#FinancialPlanning #HomeLoan #PersonalFinance #WealthBuilding #MoneyManagement #FinancialFreedom #InvestingTips #DebtFree #FinancialIndependence #IndiaFinance
Hey everyone! 👋
Need some financial advice from the group.
Just took a ₹2.35Cr home loan and trying to figure out the best strategy for my ₹3L monthly surplus.
Quick context:
- 25-year loan @ 7.5%
- ₹1.75L EMI
- Good emergency fund (₹30L)
- Already investing ₹1.3L/month
The question: Should I aggressively prepay (80% of surplus) or focus on investing (80% of surplus)?
The math:
- Aggressive prepayment: Debt-free in 10 years, ₹5.4Cr net worth
- Wealth focus: Debt-free in 20 years, ₹10Cr net worth
- Difference: ₹4.6 Crores! 😱
My dilemma: Math says invest (returns > loan rate), but carrying ₹2Cr+ debt for 20 years feels heavy psychologically.
What would you do? Anyone been through this?
Would love to hear your experiences! 🙏
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