This is one question that plagues a lot of people. Should you aim at accelerating your home loan repayments or invest the same money into other return generating avenues? There is the school of thought where if you wish to secure the future of yourself and your loved ones, then investments should be started as early as possible and built up gradually over the years. With regard to getting higher returns, there are several options for investors in India. There are some secure investment options that have lower risks and lower returns while there are high-risk investments which promise higher returns. Some investments may cover physical assets while some may require acquisition of financial assets.
Most people feel that in case some money has been saved, they can make investments or allocate the same towards the down payment for a home loan. Many experts also opine that lowering/eliminating the home loan mortgage altogether makes for a more sensible decision. Since once the mortgage is completed, you can freely invest your money for a longer period of time. However, the final decision is still pretty confusing since there are several investment options available. Many experts also state that only focusing on lowering or eliminating the home loan EMI may not be the best decision every time. Sometimes one can even benefit from investing and getting some interest on surplus savings. Before taking a decision, it is prudent to look at the following aspects-
- Your age- If you are young and have enough time to pay off your home loan mortgage while your home appreciates in value, you will be able to grow your wealth for the future by investing in a timely manner. Also, if you play the market from a very young age, you will be able to generate higher returns over a longer period of time. You can also invest more in secure investments which do not have high risks since you have time on your side when you are young.
- Investment Options- Mutual funds are some of the most preferred investment options since they offer good returns on bonds, money market instruments, securities and stocks. They can be affordable investment options and come in several types. There are however no guarantees on your earnings. Fixed deposits are secure investments that help in growing wealth with guaranteed but lower returns over a particular duration. You can also pick from recurring deposits where you deposit money every month instead of investing a huge amount at one go.
Your home will always be a major asset that will most probably appreciate in value and buying a home means accumulating a sizable amount in savings. With your own property, you can even earn money through renting it out and increase your wealth through value appreciation. You can get a home loan more easily these days. If you are buying a home in a metro city or rapidly developing area, the value of your home could increase by 10-15% annually. It then makes sense to save up for the home loan down payment and buy a home at the earliest in order to secure your future and grow your wealth through direct and tangible asset creation.
You can consider increasing your mortgage payments for repaying the home loan earlier than the specified tenor. The mortgage payment is not too high and you can always increase it a little while investing some in money into getting returns for the future. Take your decision carefully and consult experts if required.