Compare the financial outcomes of taking a home loan versus self-financing your property, factoring in potential investment returns.
⚠️ Important Note:
This model provides a simplified comparison for fixed-return investments. It cannot accurately predict the volatility or higher potential returns/losses of equity-based investments. Consult a financial advisor for personalized advice.
Final Property Value:
Monthly EMI:
Total Interest Paid on Loan:
Final Investment Value:
Final Net Asset Value:
Final Investment Value:
Final Net Asset Value:
In this scenario, the initial property amount (equivalent to the loan amount) is assumed to be paid upfront using your cash. This cash is not invested elsewhere; instead, its value is tied directly to the property's appreciation.
💡 **Understanding Opportunity Cost:** While paying cash avoids loan interest, it means your money is locked into the property. The "opportunity cost" is the potential investment returns you miss out on by not investing that capital in other avenues (like fixed income or equity) that could generate additional wealth over time.
Initial Property Value:
Property Growth Rate: % p.a.
Final Property Value after tenure:
Here, you take a full loan for the property. The cash you would have used to buy the property is instead invested in a fixed-income instrument, from which monthly EMIs are deducted.
✨ **Benefit of Liquidity (Case 2):**
By taking a loan, you keep your initial capital **liquid**. This allows you to invest it and potentially grow your wealth, and it also means you have readily available funds for **unexpected emergencies** or to capitalize on **sudden high-return investment opportunities** that may arise outside of your property investment.
This chart shows how the principal amount of your loan reduces over the years, alongside the total interest paid.
| Year | Starting Balance | Principal Paid Annually | Interest Paid Annually | Ending Balance |
|---|
Monthly EMI:
Total Loan Amount:
Total Interest Paid:
Total Payments (Principal + Interest):
This chart illustrates the growth of your fixed income investment, considering the monthly EMI deductions.
| Year | Starting Investment Balance | Interest Earned Annually | EMI Deducted Annually | Ending Investment Balance |
|---|
Initial Investment:
Post-tax Fixed Income Interest Rate: % p.a.
Final Investment Value (after EMI deductions):
This is the sum of your property's appreciated value and the final value of your fixed income investment.
Appreciated Property Value:
Final Investment Value:
Total Net Asset Value (Case 2):