Innovative Strategy: Using Mutual Funds to Pay Off Home Loans

Original: Can Mutual Funds Pay Your Home Loan? This Viral Strategy Shows How

News 18•Apr 6, 20262 min

In a Nutshell

An investor successfully purchased a ₹10 crore (approximately $1.2 million USD) home by leveraging mutual funds instead of cash. By making a ₹2 crore down payment and investing ₹8 crore in a mutual fund with a 12% return, he used a systematic withdrawal plan to cover his home loan EMIs over 20 years.

Key Points

01The investor made a ₹2 crore down payment on a ₹10 crore home.
02He invested ₹8 crore in a mutual fund with a 12% annual return.
03A home loan of ₹8 crore at 8.5% interest resulted in ₹7 lakh monthly EMIs.
04A systematic withdrawal plan (SWP) of ₹7 lakh covered the EMIs for 20 years.
05After 20 years, he owned both the house and mutual funds worth ₹10.5 crore.

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Full Summary

An innovative investment strategy has gained attention as an individual successfully purchased a house worth ₹10 crore (approximately $1.2 million USD) using mutual funds instead of cash. The investor made a ₹2 crore down payment and invested the remaining ₹8 crore in a mutual fund that yielded a 12% compound annual growth rate. To finance the home, he took out an ₹8 crore home loan at an 8.5% interest rate, resulting in a monthly EMI of ₹7 lakh. By implementing a systematic withdrawal plan (SWP) of ₹7 lakh, he was able to cover the EMIs for 20 years. After fulfilling the loan obligations, he emerged with both the house and mutual funds valued at ₹10.5 crore. This strategy emphasizes the importance of using assets to finance other investments.

Key Figures

₹10 crore

Value of the house

₹2 crore

Down payment made

₹8 crore

Amount financed through a home loan

12%

Annual return rate of the mutual fund

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Why It Matters

This strategy could inspire potential homebuyers to consider alternative financing methods, potentially making homeownership more accessible.

Who is affected

Homebuyers and investors looking for innovative financing solutions.

What to know

Prospective homebuyers should evaluate their financial options and consider consulting with a financial advisor.

FAQ

A systematic withdrawal plan (SWP) allows investors to withdraw a fixed amount from their mutual fund investments at regular intervals, providing liquidity while keeping the investment intact.

The main risks include market volatility affecting mutual fund returns and the obligation to pay EMIs regardless of investment performance.

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