- Date : 03/03/2023
- Read: 4 mins
If you've recently cleared your home loan, you now have extra money at your disposal. You can consider investing, savings, paying debts, starting an emergency fund, or improving your home.
If you have recently cleared your home loan, congratulations!
You have accomplished a significant financial milestone in your life.
After years of paying EMIs, you now have extra money at your disposal. With the housing market in India being one of the largest in the world, the home loan EMI is a significant part of many people's monthly expenses.
But now, with the loan cleared, you might wonder what to do with the extra money used to pay the EMI.
1. Invest the extra money
With the extra money, you can consider investing in various investment options such as mutual funds, stocks, bonds, and fixed deposits. Investing can help you grow your wealth and achieve your financial goals.
For instance, if you had been paying an EMI of Rs. 20,000 per month for 20 years, you would have paid a total of Rs. 48 lakhs. You can use this amount to invest in mutual funds or stocks. This can help you grow your wealth and generate returns over time.
Before investing, it is essential to have a clear understanding of your investment goals, risk tolerance, and time horizon.
Also Read: Why Every Woman Should Be an Investor
2. Saving the EMI money
You can also consider saving the extra money in a high-yield savings account or RDs. This can provide you with a secure and stable source of income, which can come in handy during times of financial uncertainty.
Let's say you have a recurring deposit with an interest rate of 7% p.a. and deposited Rs. 25 thousand monthly (savings due to cleared EMI); you can expect to earn an interest of Rs. 1,03,433 in 3 years.
This can help you grow your savings and achieve your financial goals.
3. Paying off debts
If you have any outstanding debts, such as a personal loan, credit card debt, or a car loan, consider using the EMI money to pay them off. This can help you save on interest and reduce your overall debt.
For example, if you have an Rs. 10 lakh personal loan with an interest rate of 12% and pay off the loan using the extra money, you can save on interest charges of Rs. 3.34 lakhs over 5 years.
This can help you reduce your debt and improve your financial health.
4. Starting an emergency fund
An emergency fund is a crucial component of a solid financial plan. It is a savings account specifically set aside for unexpected expenses or emergencies.
By having an emergency fund in place, you can ensure that you have the funds you need when you need them without having to rely on credit cards or loans, saving you money in interest charges.
For instance, if you set aside Rs. 10,000 each month for emergency savings, you can have a fund of Rs. 1.2 lakhs within a year. This fund can provide peace of mind and financial stability in case of unexpected expenses, such as a medical emergency or a job loss.
Also Read: Are You Maximizing Your Retirement Potential?
5. Improving your home
If you have recently cleared your home loan, consider using the EMI money to improve your home. This can include renovations, upgrades, and additions.
Suppose you decide to upgrade your kitchen; you can use the extra money to purchase new appliances, cabinets, and countertops.
Improving your home could help you enhance the value of your home and make it a more comfortable and enjoyable place to live.
In short, the extra money you have at your disposal after clearing your home loan is a significant financial boon. It's a testament to your hard work and dedication to becoming debt-free. The best way to utilize this newfound wealth will depend on your individual financial goals and needs.
However, the possibilities are endless, whether investing for a secure financial future, money saving, paying off debts, or upgrading the home. With proper financial planning and management, you can use this extra money to take control of your financial situation and create a brighter financial future for yourself and your family.
So, seize this opportunity, manage your personal finance, and let extra money work for you!
If you have recently cleared your home loan, congratulations!
You have accomplished a significant financial milestone in your life.
After years of paying EMIs, you now have extra money at your disposal. With the housing market in India being one of the largest in the world, the home loan EMI is a significant part of many people's monthly expenses.
But now, with the loan cleared, you might wonder what to do with the extra money used to pay the EMI.
1. Invest the extra money
With the extra money, you can consider investing in various investment options such as mutual funds, stocks, bonds, and fixed deposits. Investing can help you grow your wealth and achieve your financial goals.
For instance, if you had been paying an EMI of Rs. 20,000 per month for 20 years, you would have paid a total of Rs. 48 lakhs. You can use this amount to invest in mutual funds or stocks. This can help you grow your wealth and generate returns over time.
Before investing, it is essential to have a clear understanding of your investment goals, risk tolerance, and time horizon.
Also Read: Why Every Woman Should Be an Investor
2. Saving the EMI money
You can also consider saving the extra money in a high-yield savings account or RDs. This can provide you with a secure and stable source of income, which can come in handy during times of financial uncertainty.
Let's say you have a recurring deposit with an interest rate of 7% p.a. and deposited Rs. 25 thousand monthly (savings due to cleared EMI); you can expect to earn an interest of Rs. 1,03,433 in 3 years.
This can help you grow your savings and achieve your financial goals.
3. Paying off debts
If you have any outstanding debts, such as a personal loan, credit card debt, or a car loan, consider using the EMI money to pay them off. This can help you save on interest and reduce your overall debt.
For example, if you have an Rs. 10 lakh personal loan with an interest rate of 12% and pay off the loan using the extra money, you can save on interest charges of Rs. 3.34 lakhs over 5 years.
This can help you reduce your debt and improve your financial health.
4. Starting an emergency fund
An emergency fund is a crucial component of a solid financial plan. It is a savings account specifically set aside for unexpected expenses or emergencies.
By having an emergency fund in place, you can ensure that you have the funds you need when you need them without having to rely on credit cards or loans, saving you money in interest charges.
For instance, if you set aside Rs. 10,000 each month for emergency savings, you can have a fund of Rs. 1.2 lakhs within a year. This fund can provide peace of mind and financial stability in case of unexpected expenses, such as a medical emergency or a job loss.
Also Read: Are You Maximizing Your Retirement Potential?
5. Improving your home
If you have recently cleared your home loan, consider using the EMI money to improve your home. This can include renovations, upgrades, and additions.
Suppose you decide to upgrade your kitchen; you can use the extra money to purchase new appliances, cabinets, and countertops.
Improving your home could help you enhance the value of your home and make it a more comfortable and enjoyable place to live.
In short, the extra money you have at your disposal after clearing your home loan is a significant financial boon. It's a testament to your hard work and dedication to becoming debt-free. The best way to utilize this newfound wealth will depend on your individual financial goals and needs.
However, the possibilities are endless, whether investing for a secure financial future, money saving, paying off debts, or upgrading the home. With proper financial planning and management, you can use this extra money to take control of your financial situation and create a brighter financial future for yourself and your family.
So, seize this opportunity, manage your personal finance, and let extra money work for you!
