Prepay vs Invest Calculator
Should you prepay your home loan or invest the money elsewhere? Get a detailed analysis with personalized recommendations based on your financial situation and market expectations.
Calculator Inputs
Enter your loan and investment details
Current Loan Details
Available Amount
Prepayment Strategy
Your EMI will be reduced while keeping the same loan tenure
Investment Assumptions
Our Recommendation 📈 INVEST
Why Invest?
- Investment returns significantly outweigh loan interest savings
- Potential gain: ₹22,36,783 over 15 years
- Maintains liquidity and diversification
Prepayment Scenario
Investment Scenarios
Detailed Financial Analysis
Prepayment Impact
Investment Potential
SIP Strategy Analysis
Hybrid Approach
Prepay ₹5,00,000 now and invest the EMI savings of ₹4,924 monthly in a SIP.
Combined Benefits
Risk Analysis & Considerations
Prepayment Risks
- Reduces liquidity - money locked in property
- Opportunity cost if markets perform well
- May affect tax benefits under Section 80C/24B
Investment Risks
- Market volatility - returns not guaranteed
- Tax implications on gains
- Inflation risk for debt investments
- Requires discipline and regular monitoring
Important Disclaimers
How to Use This Decision Tool
Make informed financial decisions with our step-by-step guide
Enter Loan Details
Input your current loan amount, interest rate, and remaining tenure.
Set Available Amount
Enter the amount you have for either prepayment or investment.
Configure Investments
Set expected returns and portfolio allocation for investments.
Get Recommendation
Review analysis, charts, and personalized recommendation.
Understanding the Decision
Prepayment Benefits
Guaranteed savings equal to your loan interest rate, reduced financial stress, improved cash flow
Risk-Free Returns
Prepayment offers guaranteed returns equivalent to your interest rate
Investment Potential
Possibility of higher returns through equity and debt investments
Liquidity Advantage
Investments can be liquidated when needed, unlike prepaid loan amount
Prepayment Strategies
Reduce EMI Strategy
Keep the same loan tenure but reduce monthly EMI amount
Best for: Improving monthly cash flow
Reduce Tenure Strategy
Keep the same EMI but close the loan earlier
Best for: Maximum interest savings
Investment Options Explained
Equity Investments
Stocks, equity mutual funds, index funds
Expected: 10-15% annual returns
Risk: High volatility
Debt Investments
Fixed deposits, debt funds, bonds
Expected: 6-9% annual returns
Risk: Low to moderate
Mixed Portfolio
Combination of equity and debt
Expected: 8-12% annual returns
Risk: Balanced approach
Decision Framework
Choose Investment If: Expected returns exceed loan rate by 2-3%, you have high risk tolerance, and long investment horizon
Choose Prepayment If: You prefer guaranteed returns, want reduced financial stress, or loan rate is high (>10%)
Consider Mixed Approach If: Benefits are close, you want to balance risk, or diversify your strategy
Factor in Taxes: Consider capital gains tax on investments vs tax-free prepayment savings
Key Considerations
Financial Factors
- Current loan interest rate vs expected investment returns
- Tax implications on investment gains
- Emergency fund requirements
- Other financial goals and priorities
Personal Factors
- Risk tolerance and investment experience
- Age and time horizon for investments
- Job security and income stability
- Psychological comfort with debt
Common Scenarios
Young Professional
- • Age: 25-35 years
- • High risk tolerance
- • Long investment horizon
- • Recommendation: Consider investing
Mid-Career Professional
- • Age: 35-45 years
- • Moderate risk tolerance
- • Family responsibilities
- • Recommendation: Mixed approach
Pre-Retirement
- • Age: 45+ years
- • Lower risk tolerance
- • Debt-free preference
- • Recommendation: Consider prepayment
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