Buying a home is a dream for the majority of Indians. This is because in our society, having your own house is the ultimate sign of progress. People living on rent are disapproved of and are under constant pressure from family and friends to have their own homes.

This pressure to buy a home combined with skyrocketing real estate prices in most cities means most people need home loans to turn that dream into a reality.

On top of that, most people want to buy their dream home, which means that home loans taken are huge. And with massive loans come astronomical interest charges.

But what if we told you, there’s a way to do your home loan without interest. Don’t believe us? Well, read on and find out how.

Home loans cost you an incredible amount of money during their lifetime

Most banks and home finance companies highlight the EMI you need to pay for your dream home, making you think you can buy this home.

And while you might be able to pay the monthly installment, the cost of those loans is huge. In most cases, the interest paid on the amount of a long-term loan is much higher than the amount of the loan.

Here’s an example – For a home loan of ₹ 40 lakhs at 9% interest for a term of 20 years

So, if you continue to pay EMI per month for 20 years, you end up paying ₹ 86.37 lakhs in total. That additional ₹46.37 lakhs is interest you pay.

Take a moment to think about this – you pay more than the interest you borrowed, plus the actual amount.

But you can’t get rid of the interest because that’s the way the loan system works.

So does this mean you shouldn’t buy a home until you don’t have the total amount? If you can, not at all. For most of us, that may not be a viable option.

The Solution – Recover the amount of interest you’ll pay by investing in Mutual Funds

By starting a SIP of 0.10% of your home loan amount in a mutual funds, you get the interest amount back.

Let’s move on to the example we mentioned above.

If you start a monthly SIP of ₹ 4,000 (0.10% of the loan amount), your investments at an average annual return of 15% will increase to a total of ₹ 59.88 lakhs in 20 years.

From this corpus, even deducting the invested amount of ₹ 9.6 lakhs, so you will have ₹ 50.28 lakhs in your hands that is more than enough to cover the interest you are going to pay.

This calculation works regardless of the amount of your loan.

Some examples are as follows –

1.     The Loan amount is ₹ 20 lakhs

2.     The Loan amount is ₹ 70 lakhs

3.     The Loan amount is ₹ 1 Crore

Conclusion

If you have taken or plan to take a loan to buy your dream house, you will have to pay interest charges. But with a small SIP, you can recover the whole amount easily. However, this will only be a reality if you continue to invest that amount and show patience.