Before you start reading any further, it is important to note that SIP is strictly a form of investment that comes with appreciating returns. A home, on the other hand, is still a form of investment but the value in future depends on the real estate market and a host of other factors. In the next few sections, you will get the perfect insight as to where to put the money i.e. whether to prepay an existing home loan or purchase a SIP that might or might not grow into a sizeable corpus in the near future.
Why Invest in a SIP?
A systematic investment plan is an investment concept that involves the concept of cost averaging. This means that the corpus value depends on the state of the market and the existing financial condition of the concerned economy. For someone looking for prudent investment options, SIP is definitely the way to go. Moreover, if a person already has an existing loan to account for, the SIP might just be a better idea.
Prepaying Home Loans
Unlike SIPs, prepayment of housing loans comes with a host of benefits. Some of the most obvious ones include availing tax benefits, significant reduction in the loan amount, improved credit score, lesser charges, and chances of getting loans in the future. Prepayment or even foreclosing the loan using a home loan pre payment calculator is the best approach, provided you need another loan of diverse nature.