September 30, 2010 10:38 pm
Is it advisable to continue investing in mutual fund while servicing a home alone? Or should that amount be diverted to prepay the home loan ?
First caluculate what benefit is current home loan giving you and after prepaying your cash flow allows you to invest.
If your home loan is saving tax to a great extent then after repaying your tax liability suddenly increases.Sometimes you don’t have to pay a single penny because of homeloan.
Now once your tax liability increases what option you have to save taxes.Are those alternatives better.in MF apart form ELSS you don’t have other options.
DTC will have to be factored in.
So take your decision considering all these factors.
Whatever the interest is – re-pay all your loan first. Just calculate yourself & you will be shocked to see figures after comparison.
Hope it will help you.
It depend on lot of things:
Percentage of EMI in overall cashflow
Rate of Home loan
Which MF you are investing in
Are you confident enough that you will not panic & not make losses in MF
Saving habbit & Discipline
Term of loan
Nature of loan First home or investment purpose
How your financial ratios look like
Well its always better to pay your loans. If you are having excess income with you it makes sense to pay your loans, you can do part pre-payment.
You are mixing two different things, keep some money aside for MF SIP and keep some for Home prepay.
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