Home Loan · Prepayment · Investment

Loan Prepayment vs Investing

Should you use your extra money to prepay your home loan, or invest it? Get the real post-tax answer.

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Loan Details

EMI outflow

Outstanding loan (₹)

Current remaining principal.

Interest rate (%/yr)

Current home loan rate.

Remaining tenure (years)

Years left on your loan.

Extra annual amount (₹)

Amount you can prepay OR invest each year.

Income tax slab (%)

For home loan interest deduction benefit.

Sec 24b deduction limit (₹)

₹2L for self-occupied. ₹0 if fully let-out or claimed.

Home loan principal deduction (₹)

₹1.5L max under 80C (shared with other 80C investments).

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Investment Assumptions

Wealth creation

Expected annual return (%)

Nifty 50 historically ~12%.

Investment type

Annual step-up (%)

Annual increase in investment amount.

Comparison Results

🏠 Prepay Loan

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Interest saved (post-tax)

—

📈 Invest Instead

—

Final corpus (post-tax)

—

Current EMI

—

Total interest payable

—

Tax benefit on interest

—

Effective loan rate (post-tax)

—

Break-even invest return

—

Years to loan closure

—

Outstanding loan

Investment corpus

Our recommendation

Enter details & calculate

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💡 Key Insights

Effective loan rate (post-tax)—

Investment return (post-tax)—

Advantage goes to—

Interest saved by prepaying—

Extra corpus from investing—

Net difference—

Break-even return needed—

💡 General rule of thumb If your post-tax investment return > post-tax loan interest rate, investing wins.

For a 30% slab holder with 8.5% loan and ₹2L deduction: effective rate ≈ 7.8%. A Nifty index fund at 12% post-LTCG ≈ 11.3%. Invest wins — but emotional peace of being debt-free matters too.

Disclaimer: For informational purposes only. Tax deduction benefits depend on your specific situation and whether you're in old vs new tax regime. Consult a CA for personalised advice.