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How to Get Your Home Loan Interest-Free in 2024
Table of Contents
The Importance of Home Ownership
Humans have three basic needs - food, clothing, and shelter. While food and clothing are relatively easy to obtain, when it comes to housing, we often find ourselves in a dilemma. Everyone wants a home, but for those in the middle class, it is often a dream that seems out of reach. Many people who are employed have limited options when it comes to buying a house, besides taking a home loan. However, the problem with home loans arises when we have to pay interest on them. The interest amount can be so high that it forces many people to give up on their plans of owning a home. But in today's investment world, there is a way to take control of the interest amount and fulfill your dream of owning a home.
Calculating the Interest on Your Loan
Before we discuss the technique to reduce interest on your home loan, let's first see how much interest you may have to pay without any investment. We will explain the technique using an example to show how interest is calculated on different loan amounts. However, before we proceed, please like this video, as it is very important, and subscribe to our channel. We create many lovely videos and promise that after watching this video, you will be able to achieve your dream of owning a home. So, let's start with the calculation.
Loan Amount: ₹40,00,000
Tenor: 20 years
Interest Rate: 9%
The interest calculated on this ₹40 lakh loan amount over 20 years with a 9% interest rate comes out to be approximately ₹36,000 per month. Although this amount seems manageable, what most people don't realize is that over and above this ₹40 lakh loan amount, you end up paying ₹66 lakh in total. This additional amount of ₹66 lakh is like a poison that slowly eats away at your resources. But don't worry, there is a solution, and I will explain it to you in today's video.
Calculate Your Home Loan EMI & Interest Amount Check out our Home Loan calculator
The Technique to Reduce Interest on Your Loan
Let's begin by understanding how we can make your ₹40 lakh loan interest-free. The technique I'm about to share is used widely by big financial players and is even taught in educational classes and seminars. So, let's talk about home loan tax benefits. If you have already taken a home loan and are paying EMIs, it means your loan is running. I'm not denying that fact. But here's where I'm going to offer you a solution that will make your loan interest almost zero. The solution lies in utilizing the tax benefits available on home loans.
In India, there is a tax benefit available on investments and home loans. Under this benefit, you can make investments up to ₹5 lakh and claim a tax deduction. I believe that every financially aware person tries to take advantage of this ₹5 lakh tax benefit. So, let's take this ₹5 lakh investment into consideration along with the home loan. We are assuming a ₹40 lakh loan amount for 20 years at a 9% interest rate. Now, let's see how much savings we can make because of the tax benefits.
Calculation:
Loan Amount: ₹40,00,000
Tenor: 20 years
Interest Rate: 15%
If we change the interest rate to 15%, which is the maximum interest rate at which you can claim tax benefits, and calculate the savings, we see that your corpus will become ₹56 lakh instead of ₹46 lakh. The interest portion of ₹56 lakh will be free. This is the technique that is taught in financial planning classes. When people take financial learning classes, they learn how to make their home loan interest-free and how to take advantage of the tax benefits. Unfortunately, only 10% of the population understands the value of this ₹45,000 monthly savings, and the rest ignore it, thinking they have saved enough. But this is just the beginning of the game. There are many financial tricks around us that, if understood correctly, can help us make the interest portion of our loans almost zero. So, please write in the comments section about your monthly savings. If your monthly savings have increased by ₹5,000, then let's proceed ahead.
Investing the Saved Amount
Now, let's talk about the ₹77,500 monthly savings. Since we have assumed a ₹40 lakh loan for 20 years at a 9% interest rate, our EMI month stands at ₹45,000. But this ₹7,750 monthly savings can be invested in a mutual fund through SIP (Systematic Investment Plan) at an approximate interest rate of 12% per annum. So, let's calculate how much savings we can make in a month. Sorry, I meant to say how much we can accumulate annually. To do this, we will consider a 20-year time frame and a 15% interest rate.
Calculation:
Monthly Savings: ₹7,750
Tenor: 20 years
Interest Rate: 15%
So, with a monthly saving of ₹7,750, we get approximately ₹56 lakh at the end of 20 years. This amount will cover the interest portion of ₹56 lakh of your home loan. I have kept my promise of making the interest portion of your loan almost free. This is what we teach in financial learning classes, where only 10% of the population understands the value of this ₹45,000 monthly savings and utilizes it wisely.
The rest simply ignore it, and that's where everything starts to go wrong. There are many financial tricks and techniques that can help you make the interest portion of your loan almost zero. So, if you want to learn more about mutual funds or need information related to mutual funds, every Indian wants to own a cute little home. It is the dream of every Indian. To fulfill this dream, I have taken a step forward. Now it's your turn to take the next step by sharing this video.
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