Query 

Housing loan preclosure dilemma

I want to preclosure the housing laon with maturity funds in ppf , fd and savings

Second thought is to invest in mf and fd backup for any uncertainty in spouse job, if I preclose I don’t have any back up for emergency except for salary income from sposue and rental income

We have taken loan 3 years back closing early will save huge intrest portion on housing loan

Assumptions

• Date of analysis: 10-Jul-2025
  Date of Loan: 1-Jun-2022
• Loan amount: Rs. 83,00,000
• Total Loan tenure: 15 years
• Current ROI- 8.1% per annum on floating

Response

It’s a thoughtful and important financial decision

 Let’s weigh both options:

✅ Option 1: Preclosing the Housing Loan

 Pros:

• You will save a significant amount on interest outflow, especially since home loans are front-loaded with interest in the initial years.
• You gain emotional and financial freedom from debt.
• Monthly cash outflow towards EMIs will stop, improving monthly liquidity.

 Cons:

• Ties up your long-term savings (PPF, FDs), which are usually meant for safety or retirement.
• You may be left with limited liquid funds for emergencies.
• Opportunity loss: the returns from mutual funds (in long term) or even hybrid investments could potentially be higher than the home loan interest rate (after tax benefits).

✅ Option 2: Continue the Loan & Invest Surplus

Pros:

• You maintain liquidity, which is crucial given the uncertainty in your spouse’s job.
• You could earn higher returns by investing in a mix of mutual funds and FDs while continuing to avail of tax benefits on home loan interest (Section 24b and 80C).
• Helps in building an emergency corpus.

Cons:

• You continue to pay interest on the home loan, reducing your net savings in the short term.

👇 Our Suggestion (Balanced Approach):

Consider a hybrid strategy:

1. Part-Prepay the Loan: Use part of the FD or savings (not PPF) to reduce your principal. This reduces interest significantly but keeps some funds intact.
2. Keep an Emergency Corpus: Maintain at least 6–9 months of household expenses in liquid FDs or savings.
3. Start SIPs in Mutual Funds: With the EMI burden reduced, channel some surplus into equity mutual funds for long-term growth.
4. Review PPF Maturity Plan: PPF is a long-term retirement-focused instrument with tax-free returns. Avoid using this unless it’s your only option.

Comparative Summary Sheet

Here is a comparative summary sheet for your housing loan as of July 2025, based on your inputs:

🔍 Interpretation:

• If you preclose now, you can save ₹4,057,391 in future interest.
• However, you’d need to arrange ₹72.43 lakhs immediately, which may affect your emergency fund.
• Continuing the loan offers liquidity, but at the cost of higher total interest.

Comparative Analysis of prepaying your housing loan vs. investing the same amount

Here’s a comparative analysis of prepaying your housing loan vs. investing the same amount (₹72.43 lakhs) over the remaining 11.83 years:

💡 Interpretation:

• Prepaying is emotionally rewarding and saves you ₹40.57 lakhs in interest.
• Investing in Mutual Funds (10–12% expected return) could generate 3–6 times more value than just interest saved.
• Even conservative FD returns (6%) exceed interest saved over time.
• The key trade-off is between debt-free peace of mind vs. wealth creation + liquidity.

To discuss more and have a detailed financial schedule and plan book our online consultation where our dedicated expert will walk through the entire process. For more details call at +91 76766 15955 or email to support@jlnrco.com