Hi,
I have a Home Loan from SBI of 20 lacs for 30 years (360 months )@ 10.15% interest. EMI comes to around 19070 after taking all cost into consideration (Loan Insurance as well ). I am paying extra 6000/- EMI i.e: 25070/- per month to add 72000/- annually to the principal prepayment thus trying to reduce the tenure of loan. At my current income level paying 25070/- EMI is not an issue for me and I can afford this burden easily with my other monthly expenses and liabilities.
My question is that I have extra surplus 100000/-, what should I do, should I go for Prepayment of this loan or invest the same on ongoing PPF @ 8.7% interest. My age is 26, I am not looking forward for tax saving as homeloan is solving the issue, I opted PPF as I find it safe and easy tool for retirement planning. I am not that kneen in investing in equities or mutual funds. I am confused as the annual return is less than annual interest I am paying. Looking at my age and other factors please advise what is suitable step.