Confused between taking a Rs 1.5 crore home loan or investing the same EMI in SIP? Discover which is smarter with detailed calculations, tax benefits, and future value projections.
Should You Buy Now or Invest First? Let’s Find Out with Detailed Calculations
Buying a house is a major life decision, and so is choosing how to finance it. Some prefer to take a home loan and own a house right away, while others prefer to invest via SIP (Systematic Investment Plan) and buy a home debt-free in the future.
In this article, we break down which route is more effective taking a ₹1.5 crore home loan today or building a ₹1.5 crore SIP corpus using realistic financial assumptions and actual numbers.
🏠 What Is a Home Loan?
A home loan allows you to borrow money from a bank or lender to buy a house. You repay the loan with interest via EMIs (Equated Monthly Installments) over several years.
Benefits:
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Immediate homeownership
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Long repayment tenure (up to 30 years)
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Tax benefits under Sections 80C and 24(b)
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Fixed monthly outgo
📈 What Is a SIP (Systematic Investment Plan)?
A SIP is an investment method where you invest a fixed monthly amount in mutual funds. It’s ideal for long-term wealth creation due to the power of compounding.
Benefits:
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High flexibility
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Historically strong returns (we assume 11% CAGR)
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Lower entry cost
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Can build corpus for future goals like home purchase
💡 Buying a Home via ₹1.5 Crore Home Loan – Practical Example
To buy a home with a ₹1.5 crore loan, you’ll need to make a 10% down payment, making the total home value:
₹1.5 crore loan + ₹15 lakh (10% down payment) = ₹1.65 crore home
Loan Details:
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Loan Amount: ₹1.5 crore
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Interest Rate: 8.5% per annum
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Tenure: 20 years
📌 EMI Calculation:
EMI for ₹1.5 crore @ 8.5% for 20 years = ₹1,30,022/month
Total Repayment = ₹1,30,022 × 12 × 20 = ₹3.12 crore
Interest Paid = ₹3.12 crore – ₹1.5 crore = ₹1.62 crore
So you pay more than double the loan amount over 20 years. However, you get instant possession and start living in your dream home today.
✅ Why Choose a Home Loan?
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Immediate homeownership
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No need to wait for property prices to rise further
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Save on rent
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Fixed EMI-based discipline
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Income tax benefits (up to ₹2 lakh on interest + ₹1.5 lakh on principal)
📉 Why Choose SIP Over Home Loan?
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Avoids high-interest burden
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Flexible investment
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Builds wealth over time
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Allows you to buy home debt-free
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Long-term financial control
💰 SIP Investment Matching EMI – Build Wealth First
Let’s assume instead of paying EMI, you invest that same amount (₹1,30,022/month) in a SIP with 11% annual return.
SIP Details:
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Monthly SIP: ₹1,30,022
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Tenure: 10 years
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Return: 11% CAGR
SIP Calculation:
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Total Investment: ₹1.30 lakh × 12 × 10 = ₹1.56 crore
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Expected Corpus Before Tax = ₹2.69 crore
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Capital Gains = ₹2.69 crore – ₹1.56 crore = ₹1.13 crore
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LTCG Tax (10% on ₹1.13 crore – ₹1 lakh): ~₹11.2 lakh
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Corpus After Tax = ₹2.58 crore
So in 10 years, your SIP builds a ₹2.58 crore corpus, sufficient to buy a far better house – fully paid.
🏠 Future Value of ₹1.65 Crore Home in 10 Years
Assuming 5% annual appreciation:
Future Home Price = ₹1.65 crore × (1.05)^10 = ₹2.69 crore
Your SIP corpus of ₹2.58 crore is almost enough to buy the same home (or similar) without a loan in 10 years.
🔍 ₹1.5 Crore Home Loan vs ₹1.5 Crore SIP – Face-Off
| Factor | Home Loan Today | SIP Investment (11% CAGR) |
|---|---|---|
| Monthly Outgo | ₹1,30,022 (EMI) | ₹1,30,022 (SIP) |
| Tenure | 20 years | 10 years |
| Immediate Home Ownership | Yes | No |
| House Price Today | ₹1.65 crore | N/A |
| House Price After 10 Years | ₹2.69 crore | Can afford with ₹2.58 crore |
| Total Outgo | ₹3.12 crore | ₹1.56 crore + LTCG tax |
| Flexibility | Low | High |
| Financial Freedom | Low (Debt for 20 years) | High (Debt-free in 10 years) |
| Tax Benefits | Section 80C & 24(b) | 10% LTCG on gains above ₹1 lakh |
🧠 Final Verdict: Which Is Better?
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If you need to own a home right now, and can comfortably pay EMIs, a home loan is suitable.
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If you can wait and focus on long-term returns, investing the EMI in a SIP at 11% CAGR can help you buy a similar or better home debt-free in 10 years.
Your choice depends on your financial priorities, timeline, risk appetite, and life goals.
🚀 Pro Tip:
If you’re planning for a house 5 – 10 years down the line, SIP is a powerful tool. But if your need is urgent, go for a home loan – while still maintaining a small SIP for long-term wealth.
