By Safe Investment July 20, 2025
Buying a house is everyone's dream. But paying home loan and huge EMIs sometimes becomes a burden. You end up paying more than twice the amount of loan you take to the bank. On the other hand, if you invest in SIP, you can create a big fund along with the house.
Home Loan vs SIP: It is everyone's dream to buy their own house.
Buying a house is everyone's dream. But paying home loan and huge EMIs sometimes becomes a burden. You end up paying more than twice the amount of loan you take to the bank. On the other hand, if you invest in SIP, you can create a big fund along with the house. Some financial experts believe that instead of paying EMI for a long period, if you invest the same money in SIP (Systematic Investment Plan), you can easily buy a house in the future. Now the question arises whether investing in SIP is better than taking a home loan?
Know the cost of home loan
Suppose you have taken a home loan of Rs 60 lakh at 9% annual interest rate for 20 years. Your monthly EMI on this will be around Rs 53,984. In 20 years, you will pay a total of Rs 69,56,053 as interest only. That means you will have to pay a total of Rs 1.30 crore on a loan of Rs 60 lakh. That means you will have to pay almost double the amount for a house worth Rs 70 lakh.
Benefits of investing in SIP
If you invest the same Rs 53,984 every month in a mutual fund SIP for 20 years and get an average annual return of 12%, then the total investment will be Rs 1.29 crore. But after 20 years your fund can grow to about Rs 5 crore (Rs 4.96 crore). That is, you will get a benefit of up to Rs 3.67 crore.
Keep in mind the effect of inflation
If we assume an average inflation rate of 6%, then the price of a house which is Rs 70 lakh today can reach Rs 2.24 crore after 20 years. That is, the cost of buying a house will also increase with time.
Which option will be right?
If you take a home loan and pay EMI, then in 20 years you will pay Rs 1.30 crore by paying interest of Rs 69 lakh. By investing in SIP, you can save around Rs 5 crore, out of which even after spending Rs 2.24 crore to buy a house, you will still have Rs 2.75 crore left. That is, through SIP, you can buy a house and also save a good amount of funds. If you have the right investment planning, then SIP can be a great option. But if you need a house immediately, then you will have to take a home loan. It will be right to take a decision according to your need and situation.
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