Part-pay your home loan or keep the money invested? See what each does
Put the money you hold next to your loan. This page shows what a part-payment would do to the loan, the return the money would need to earn to match it, and what to check before selling anything. It does not say which to choose.
Nothing you type leaves your browser. We count only that the tool was used, never the figures.
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The numbers you type stay on your device and are not saved. We only count that a check happened. This describes what the amount you enter would do to the loan, using your inputs. It is not a forecast and not advice on whether to sell, keep or part-pay.
How this is worked out
- The loan. Your EMI is worked out from the balance, rate and months left. A part-payment is taken off the balance today, after the cost of selling.
- Sooner or lower. Keeping the EMI, the loan ends earlier. Keeping the end date, the EMI is lower. Interest no longer charged is the interest the loan would stop accruing under each.
- The loan's effective yearly cost is the rate with monthly charging taken into account.
- The return needed to match is the yearly return that would leave you with the same amount at the end of the remaining term as putting the money, after the cost of selling, against the loan. With no cost of selling it equals the loan's effective yearly cost; a cost of selling lowers it a little, because staying invested avoids that cost.
- What is left out. Tax on investment gains at the end, any tax benefit on the loan interest, changes in your loan rate at later resets, inflation, and the risk of the investment. A floating rate can change; an investment's return is not guaranteed.
Before you sell anything
- Ask for the exact amount you would receive after exit load, surrender or discontinuance charges, and tax.
- Check any lock-in period, and whether selling an insurance plan means losing life cover.
- Ask your lender how it applies a part-payment, to the EMI or to the end date, and whether it charges anything.
- Keep money you may need soon. A part-payment is hard to take back.
Whether to sell, keep or part-pay is your decision. LoanRepo recommends no investment, lender or insurance product and takes no commission.
Questions
Is it better to part-pay a home loan or keep the money invested?
It depends on things these numbers do not include: the investment's return after tax and its risk, how soon you may need the money, your goals and the cost of selling. This page shows what each choice does so you can decide. The interest a part-payment saves does not depend on markets; an investment's return does.
What return does an investment need to match my home loan?
About the loan's effective yearly cost, and a little less if selling would cost you something, because that cost is avoided when the money stays put. A loan at 8.9% a year, charged monthly, costs about 9.3% a year effectively. The comparison is before tax on gains and ignores any tax benefit on the loan interest.
Does a part-payment shorten the loan or lower the EMI?
Either can happen, depending on how your lender applies it. Keeping the EMI shortens the loan; keeping the end date lowers the EMI. This page shows both. Ask your lender how it applies a part-payment.
What should I check before selling an investment or a ULIP?
The exact amount you would receive after exit load, surrender or discontinuance charges and tax; any lock-in period; whether you would lose life cover; and whether your lender allows part-payment and how it applies it.
Is this financial advice?
No. It shows what each choice does with the numbers you enter. It does not say which to choose, recommends no investment, lender or insurance product, and takes no commission.