20 Lakh Home Loan vs 20 Lakh SIP Corpus: Which is the Faster Route to Your Dream Home?

Rs 20 Lakh Home Loan vs Rs 20 Lakh SIP Corpus: Which is the Faster Route to Your Dream Home?

Know the Difference, Do the Math, Make the Right Choice

Owning a home is a cherished dream for millions of Indians. But in today’s world of smarter financial planning, people are increasingly asking – should I take a home loan and buy a house today, or should I invest the equivalent EMI into a Systematic Investment Plan (SIP) and buy the same house later without a loan?

In this article, we compare these two approaches (Rs 20 Lakh Home Loan vs Rs 20 Lakh SIP Corpus) with calculations, helping you make an informed decision.

🏡 Buying a Home via 20 lakh Home Loan – Explained with Example

Let’s assume you wish to buy a house worth Rs 22.22 lakh today. You make a 10% down payment (Rs 2.22 lakh) and take a Rs 20 lakh home loan.

📌 Loan Assumptions:

• Loan Amount: Rs 20 lakh

• Interest Rate: 8.5% per annum

• Tenure: 20 years

• Down Payment: Rs 2.22 lakh (10%)

📌 Home Loan EMI Calculation:

Using the standard EMI formula:

• EMI = Rs 17,336 per month

• Total Payment Over 20 Years = Rs 41.6 lakh

• Total Interest Paid = Rs 21.6 lakh+

You end up paying more than double the loan amount over 20 years.

💡 Why Choose Home Loan Over Investment?

• Immediate ownership of your dream home

• Save on rent over the years

• Property prices may rise, giving capital appreciation

• Tax benefits reduce net outgo

• Emotional satisfaction of having “your own” home

📉 Why Choose SIP Over Home Loan?

• No debt or EMI stress

• Higher returns over time (SIPs average ~11% p.a.)

• Flexible and liquid investments

• Can buy home with lump sum after corpus build-up

• Overall lower outgo compared to home loan

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📊 SIP Investment – Building a Rs 20 Lakh Corpus

Instead of paying EMI for 20 years, what if you invest Rs 17,336/month (same as EMI) for 10 years in a SIP yielding 11% annual return?

📌 SIP Assumptions:

• Monthly SIP: Rs 17,336

• Investment Period: 10 years

• CAGR: 11% per annum

• Total Investment: Rs 20.8 lakh

• Final Corpus Before Tax: Rs 36 lakh

📌 LTCG Tax Calculation:

• Gain = 36 lakh – 20.8 lakh = 15.2 lakh

• Taxable Gain = 15.2 lakh – 1 lakh = 14.2 lakh

• LTCG Tax @10% = 1.42 lakh

Final Corpus After Tax = 34.6 lakh

You now have enough corpus to buy a better home – without a loan.

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🏠 What Will the Home Cost After 10 Years?

If a Rs 22.22 lakh home appreciates at 5% annually, the value after 10 years will be:

Future Value = 22.22 × (1.05)^10 = 36.2 lakh

Your SIP corpus after tax = 34.6 lakh, just Rs 1.6 lakh short – easily managed via savings or a small loan.

🔍 Home Loan vs SIP Investment – At a Glance

Also Read: Rs 70 Lakh Home Loan vs Rs 70 Lakh SIP Corpus: Which is the Faster Route to Your Dream Home? 

✅ Conclusion: Which is Quicker to Buy a Dream Home?

If you want immediate ownership, go for a 20 lakh home loan – you move in today but pay much more over time.

If you can wait 10 years, SIP investment could let you buy the same house – or a better one – debt-free and at a much lower cost.

This decision depends on your current financial stability, risk tolerance, and future goals. Either way, planning early and consistently will always pay off.

You might also like: What If You Invest Rs 5,000 a Month in SIP? See How Long It Takes to Reach Rs 10 Lakh, 20 Lakh, 50 Lakh, 1 Cr & 2 Cr!

 Disclaimer: Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.