How to Pay Zero Interest on Your Home Loan: Tips from Manav Narang

Are home loan interests draining your finances? Home loan interests can be quite a horror for those who don't know how to manage their finances effectively. Manav Narang, a digital creator who specializes in finance, tech, travel, and more, shares valuable tips on how you can potentially pay zero interest on your home loan. Read on to discover a smart financial strategy that could save you a substantial amount of money.

How to Pay Zero Interest on Your Home Loan

Manav Narang presents a clever method to manage your home loan interest by leveraging strategic investments. Here's a detailed explanation of his approach:

Understanding the Home Loan Scenario

Let's assume you have taken a home loan of 20 lakhs with an ROI (rate of interest) of 9% for 20 years. The EMI (equated monthly installment) for this loan will be around 18,000/- per month. Over the 20-year period, the total repayment amount will be 43 lakhs (18,000 * 12 * 20). Out of this, the interest part will be a whopping 23 lakhs!

The Strategy: Using SIP to Offset Interest

To tackle the hefty interest payments, Manav suggests starting a Systematic Investment Plan (SIP) alongside your home loan repayments. Here's how it works:

• Calculate 15% of Your EMI: Take around 15% of your loan's EMI amount, which in this case is approximately 2,500/- per month.
• Start a SIP with This Amount: Begin a SIP with the 2,500/- per month.
• Assume a Standard Return Rate: Assuming a standard return rate of 13.5% per annum from the SIP, you will accumulate approximately 24 lakhs in 20 years.
• Offset the Home Loan Interest: The returns from the SIP (24 lakhs) will effectively cover the interest portion of your home loan (23 lakhs).

Implementation: Loan EMI and SIP Installment

It's important to note that your loan's EMI and SIP installment will continue simultaneously. You will need to pay the home loan's EMI and interest as per the loan schedule. The hack here is that while you are paying off your loan, your SIP investments are growing in parallel. By the end of the loan term, the returns from your SIP can be used to offset the total interest paid on the home loan, essentially making your interest payments zero.

Benefits of This Strategy

• Financial Discipline: This strategy promotes financial discipline by encouraging regular investment alongside loan repayment.
• Wealth Creation: Besides covering the interest, the SIP can also act as a wealth creation tool, providing financial security.
• Inflation Beater: Investing in SIPs with a good return rate helps beat inflation and increases your financial returns over time.
• Stress Reduction: Knowing that your interest is being effectively managed can reduce the financial stress associated with long-term loans.

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Manav Narang's approach to managing home loan interest through strategic SIP investments offers a practical solution to a common financial burden. By implementing this strategy, you can turn the daunting task of paying home loan interest into an opportunity for financial growth. Start your SIP today and watch your investments grow, ultimately covering your home loan interest and securing your financial future.