Home Loan EMI vs SIP

A home loan EMI is an equated monthly instalment that a borrower pays to the home loan lender. It is the amount payable every month to the lender until the loan is fully paid off. It consists of the principal amount and interest due for the month. The home loan EMI amount is calculated based on the loan amount, interest rate and tenure of the loan.

SIP:

A SIP or Systematic Investment Plan is an investment plan offered by mutual funds. It is an easy way to invest a fixed amount of money in mutual funds periodically. These investments are made at regular intervals, usually monthly or quarterly. It helps to build a corpus over a period of time by investing small amounts regularly. It is also known as rupee cost averaging as it allows investors to buy more units when the price is low and fewer units when the price is high.

A Home Loan EMI calculator and a SIP calculator are two different types of financial calculators. A Home Loan EMI calculator helps you calculate the monthly payments you need to make in order to pay off a home loan. It also helps you determine how much interest you will be paying over the lifetime of the loan. On the other hand, a SIP calculator is designed to help you determine how much you should invest in a Mutual Fund Systematic Investment Plan (SIP) in order to achieve your financial goals. It allows you to input the amount of money you want to invest, the frequency of investments and the duration of the SIP. The calculator will then give you the amount of money you need to invest each month in order to reach your desired goal.

How to Calculate Home Loan EMI Vs SIP?

Let’s understand how beneficial is this concept? and how does it actually works!

For eg:-

Your Loan Amount – 40,00,000

Loan Interest – 8%

Loan Tenure – 25 Years

Your EMI would be near around – 30800 which you will be paying to the bank as interest.

Your total interest amount for the tenure would be around – 92.6 Lakhs which you need to pay to the bank. Now we will check, how you can recover this amount with just a small amount of SIP.

To recover 92 Lakhs in 25 years you need to start an SIP of .10% of your loan amount or 10% of your EMI. In this case you need to start an SIP of 4000 per month for the same loan tenure.

If you start an SIP of 4000 every month for 25 years the resultant amount will be nearly around – 1.01 CR and hence you will be able to recover the interest amount.

Home Loan EMI Calculator:

This calculator helps you determine the monthly payment that you would need to make on your home loan. It takes into consideration the loan amount, tenure, and interest rate to arrive at the EMI.

SIP Calculator:

This calculator helps you calculate the returns of your Systematic Investment Plan (SIP). It takes into account the initial investment, the frequency of investment, the investment amount, and the rate of return to determine the returns of your SIP.

This is how the calculator helps you to calculate EMI, based on the amount of principal and duration of period according to the rate of interest has been prescribed. SIP calculator help you calculate as well as manage the interest yo are supposed to give as well as you can even compare the plan from other offers and companies as well.