Should you invest or pay off your home loan?

Today's discussion is about whether a person with surplus money should choose to pay off his home loan or invest it. But before that, I want you to tell us something about the changes in the interest rate structure of home loans that has recently come about. Dhirendra: It is about bringing some degree of accountability to banks. Right now what happens is, every consumer hears the story that interest rates are coming down. The rates on our deposits are coming down. And the expectation is that if you have borrowed money, then even the interest on that should come down. But it rarely happens. So RBI has come up with a framework that when interest rates come down, banks should automatically reduce the interest rate on home loans. It should not be dependent on the request, mercy, or the choice of the bank. RBI has come up with a rule that effective October 1, new home loans shall be externally benchm

This article was originally published on October 25, 2019.