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Lessening EMI Burden

If your portfolio returns are higher than the loan interest you plan to pay, you can redeem part of your investments…

I have been regularly investing in mutual funds and plan to take Rs 45 lakh loan to buy a house. My current salary does not permit me to continue investing as most of what I invest and more will go towards servicing the home loan EMI. Comparing the rising home loan rates and returns on investments, I can sell my current mutual fund investments and reduce my loan liability and still continue investing a small amount or discontinue future SIPs to service the EMI. Please advice?- Nupur Jain

We can understand your dilemma; if your portfolio return is higher than the home loan interest rate, you should adopt the strategy of redeeming part of your exiting fund investments to reduce the EMI burden and continue investing in the funds that you have invested in, even if it is less. The advantage of investing regularly for the long term is something that you have figured by now and should take advantage of. However, if your portfolio returns are less than the home loan interest, it will be good for you to redeem your investments and reduce your home loan liability.



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