Home loan interest and FD interests are very close to each other
I have already started thinking whether closing the Home loan soon is a good idea or not. Maybe it is better to save the money and invest it on something else. The primary reason for these thoughts is that the percentage of interest on a Home loan is 7.9 percent, while an FD offers close to 7.1 percent interest. There is just a 1 percent difference in these things. Perhaps the interest value can vary from one person to another, but at least it has decreased right now due to the RBI's reduction in the Repo Rate.
A few months back the home loan interest was 8.15, and it got reduced to 7.9 even further. This is a good thing. And considering the fact that there is only a 1 percent difference to both, maybe it is also good to keep the loan intact and pay that later. But some people have the perspective where they don't want to have any loan at all and they would like to live with the amount they have and not with the amount that was borroed from someone or some bank. But I would say that both perspectives are correct.
One thing about loans is that we will not know the burden when getting the loan, but when we start paying the interest every month, we will start getting the burden. People might use this as an opportunity to exploit because people might not repay the loan as fast as they want to. Instead, what they would do is invest the same money in some other investment, and then they might pay the loan amount with the revenue being generated from that source.
I don't think the interest rate for the loan would drop even further, and if that happens, there will be no difference between the FD and home loan.
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I would prefer to close to home loan, you never know what can happen in your life and I wouldn't want bank to take my home
I like how you’re thinking it through instead of rushing to decide. Decision like this requires time to decide no doubt. To some people, they feel better being debt-free, while others prefer to invest and grow their money. Like you said, both sides are good. It just depends on how you see it and how it will affect you in the good run. But I will always prefer investment over since the return can pay off my debt in the long run.
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I personally did not like taking any loan anyone because the headache it always cause when trying to repay is enormous
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It's important to weigh both the interest rates and personal comfort with debt. Ultimately, this makes one choose what aligns best with one's financial goals and risk appetite.