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POSTED BY ON July 8, 2014 7:41 pm COMMENTS (2)
I am 30 years old, married with a 3 year old son . I have a home loan with principal outstanding of 19 lakhs carrying an interest of 10.15%. I pay an EMI of 40,000 a month. I invest in SIP every month worth 21000. I have a fixed deposit in a bank worth 23 lakhs that earns me a taxable interest of 8.75%. Should i use my fixed deposit to pay off the outstanding home loan?
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Your FD is not generating more money than what you are paying on home loan interest. Suggest you rejig your home loan by pre-paying some amount from FD.
Keep your EMI same but reduce the tenure. This way you shall close loan fast, still get some tax benefit on your home loan.
Also, to get better returns on your FD, why don’t you look at debt funds. These are a little better than the plain FDs when it comes to returns calculation due to indexation benefit.
Considering your age, (if you are ready to take some risk), you may also put some money in equity MF for better long term returns.
Ashish
You will not be getting the tax benefit if you close the home loan now.
If the home loan is not of floating interest type, you will have to pay pre-closure charges.
You will be financially free as now your house becomes an asset for you if you close the loan and emotionally speaking…. the home is all yours…. no bank owns it if you close the loan…. 🙂
These are some of the points which I got now…. so decide which would be the suit you and decide.