Should I pay towards my home loan debt or save the additional money I have ?

POSTED BY vinay100 ON June 25, 2014 5:59 pm COMMENTS (8)

My total Income from all the sources is 1 lakh per month. My spendings are around 30k, i have a loan of 16Lakhs with an interest of about 8500 per month to be paid. I have to spend 13k per month for insurance, ppf . So i am left out with 50k per month. 16L loan is because of my marriage and my sisters marraige that toook place recently. My age is 31 years.So my question is

Do i need to pay this amount of 50K that is left out completely to my debt?

if not

Do i need to save some amount of money and then pay the other towards my debt. Please help…Thank u

8 replies on this article “Should I pay towards my home loan debt or save the additional money I have ?”

  1. Kshitij_Peter says:

    Vinay,

    I think you should pay off the loan ASAP.

    My 2 cents:
    1. You are paying 2% more on the FD.
    2. Even if your relatives are in no hurry, better pay-off. I see it as you are enjoying the benefit of interest on their money (Imagine the reverse case).

  2. vinay100 says:

    i dont have ulips…i have term plans, health plans for me,my wife and father..I am paying my loans through my salary..i am a govt employee..My relatives are not in that hurry but still they are looking forward for the money. Interest rate on loan FD is around 2% more than my FD. Well after all my expenses,insurance,interest for loan i am left out with this 50K. This loan amount was used for marriage purpose. so I am confused how much i can save and how much i can payoff. Please help Thank u

  3. sharath Mumbai says:

    Hi Vinay,
    You didn’t mention how you are repaying your relative’s loan. I assume you are paying in lumpsums periodically.
    What is the interest rate on your loan against FD ? and what is the tenure for that loan ?
    You also mentioned 13k for insurance and ppf. Do you have any ULIPs ? In that case you should close them off after their minimum paying period and buy a term insurance. PPF is good.. continue the same.
    Now, coming to your question.. paying off loan vs Investing, this depends on the interest rate and the flexibility of payments. How soon do your relatives want their money back ? If they are giving you good amount of time, then you can save ~45k per month in mutual funds for an year and then pay them back accordingly. you can also put the money in RD for that period, but interest from RD is taxable in your hands.
    Please answer these questions so that people would be able to guide you properly.

    cheers

  4. Hemanth Chandra says:

    Is it a personal loan…. ? What is the interest rate ?

    1. vinay100 says:

      Actual loan amount is 9.7L against Fixed deposit..so for that i am paying a total interest of 8500 per month. The rest is the loan that i borrowed from relatives and friends which is a total of 6.3 L so totally it is 16L .

      1. Hemanth Chandra says:

        There will be a tax benefit for home loans. In your case, no tax benefit also, so better payoff the loan ASAP. Better close the ones for which you are paying more interest

        1. Hemanth Chandra says:

          Sorry, I am thinking your loan is personal loan…. As it is a home laon, are you getting any tax exemption ??

  5. Kshitij_Peter says:

    Even I am interested to know this from some “expert” – Save vs Payoff debt.

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