3D Visual Story

Home Loan Overdraft (MaxGain) vs Equity SIP: The Smart Strategy

Understand how parking surplus funds in home loan overdraft generates risk-free 8.75% tax-free savings with complete liquidity.

Episode #04

Home Loan Overdraft (MaxGain) vs Equity SIP

8.75% Guaranteed Tax-Free Savings vs 12% Market Equity SIP

🎨FinComics 3D Studio

#1The ₹10 Lakh Dilemma

₹10L Surplus

🤔

Aman(Homeowner)

“I have ₹10 Lakhs in savings. Should I prepay my 8.75% SBI Home Loan or invest it into an equity mutual fund SIP?”

📌Aman worries that standard prepayment locks his liquidity forever, while equity has short-term market volatility.

#2The MaxGain Overdraft Secret

8.75% Tax-Free

💡

Priya(Financial Planner)

“Aman, park your surplus in an SBI MaxGain Home Loan Overdraft account! As long as the balance sits there, you pay ZERO interest on that portion.”

📌The overdraft balance yields a guaranteed, risk-free 8.75% tax-free saving while remaining 100% liquid anytime.

#3The 12.5% LTCG Tax Reality

Post-Tax Math

📊

Priya(Financial Planner)

“Equity mutual funds delivering 12% yield approx ~10.5% post 12.5% LTCG tax. Saving 8.75% home loan interest is completely risk-free and tax-free!”

📌Priya demonstrates that guaranteed interest reduction is equivalent to a risk-free post-tax yield.

#4The Perfect Dual Strategy

Optimized Plan

🚀

Aman(Confident Investor)

“Brilliant! I will park my emergency buffer in the home loan overdraft to slash 7 years off my loan, and continue monthly SIP with the rest!”

📌Aman now calculates exact interest saved and tenure reduction on fincalculator.in.

Live Simulator: Prepayment vs SIP Comparison

Enter your loan amount, interest rate, and monthly surplus to test the numbers.

Loan & Investment Parameters

Home Loan Principal (₹)

₹

Quick Loan Presets:

₹5.00 L₹3.00 Cr

Home Loan Interest Rate (%)

6.5%14%

Loan Tenure (Years)

Yrs

5 Yr30 Yrs

Monthly Surplus for Prepayment / SIP (₹)

₹

₹1,000₹1.00 L

Expected Mutual Fund SIP Return (%)

Long-term Nifty 50 historical average: 12-14%

8%18%

Standard Monthly EMI:: ₹43,391 /mo
Total Interest (Without Prepayment):: ₹54.14 L

SIP Strategy Outperforms Prepayment!

SIP generates ₹22.01 L MORE Wealth!

Wealth Advantage: +₹22.01 L; Investing surplus in a 12% equity SIP yields ₹22.01 L MORE post-tax wealth than prepaying an 8.5% home loan.

Strategy 1: Prepay Loan

Guaranteed Return

New Loan Tenure: 12.9 Years; ⚡ Saves 7.1 Years of EMIs!

Monthly Payment:: ₹53,391 /mo
Total Interest Paid:: ₹32.35 L
Total Interest Saved:: ₹21.79 L
Post-Loan SIP Corpus:: ₹71.71 L
Net Wealth at Yr 20:: ₹68.57 L

Strategy 2: Invest in SIP

Highest Wealth

Accumulated SIP Corpus: ₹90.58 L; Post-Tax (12% p.a.) · Compounding Growth

Monthly SIP Amount:: ₹10,000 /mo
Total Capital Invested:: ₹24.00 L
Pre-Tax Future Corpus:: ₹99.91 L
Estimated 12.5% LTCG Tax:: -₹9.33 L
Net Wealth at Yr 20:: ₹90.58 L

Year-by-Year Loan Amortization & Wealth Accumulation Schedule

Show as

Year 1
Standard Loan Balance
₹49.00 L
Prepaid Loan Balance
₹47.76 L
SIP Investment Corpus
₹1.28 L
Wealth Leader
SIP (+₹1.28 L)
Year 2
Standard Loan Balance
₹47.92 L
Prepaid Loan Balance
₹45.32 L
SIP Investment Corpus
₹2.72 L
Wealth Leader
SIP (+₹2.72 L)
Year 3
Standard Loan Balance
₹46.74 L
Prepaid Loan Balance
₹42.66 L
SIP Investment Corpus
₹4.35 L
Wealth Leader
SIP (+₹4.35 L)
Year 4
Standard Loan Balance
₹45.46 L
Prepaid Loan Balance
₹39.77 L
SIP Investment Corpus
₹6.18 L
Wealth Leader
SIP (+₹6.18 L)
Year 5
Standard Loan Balance
₹44.06 L
Prepaid Loan Balance
₹36.62 L
SIP Investment Corpus
₹8.25 L
Wealth Leader
SIP (+₹8.25 L)
Year 6
Standard Loan Balance
₹42.54 L
Prepaid Loan Balance
₹33.19 L
SIP Investment Corpus
₹10.58 L
Wealth Leader
SIP (+₹10.58 L)
Year 7
Standard Loan Balance
₹40.89 L
Prepaid Loan Balance
₹29.47 L
SIP Investment Corpus
₹13.20 L
Wealth Leader
SIP (+₹13.20 L)
Year 8
Standard Loan Balance
₹39.09 L
Prepaid Loan Balance
₹25.41 L
SIP Investment Corpus
₹16.15 L
Wealth Leader
SIP (+₹16.15 L)
Year 9
Standard Loan Balance
₹37.13 L
Prepaid Loan Balance
₹20.99 L
SIP Investment Corpus
₹19.48 L
Wealth Leader
SIP (+₹19.48 L)
Year 10
Standard Loan Balance
₹35.00 L
Prepaid Loan Balance
₹16.18 L
SIP Investment Corpus
₹23.23 L
Wealth Leader
SIP (+₹23.23 L)
Year 11
Standard Loan Balance
₹32.68 L
Prepaid Loan Balance
₹10.95 L
SIP Investment Corpus
₹27.46 L
Wealth Leader
SIP (+₹27.46 L)
Year 12
Standard Loan Balance
₹30.15 L
Prepaid Loan Balance
₹5.26 L
SIP Investment Corpus
₹32.23 L
Wealth Leader
SIP (+₹32.23 L)
Year 13
Standard Loan Balance
₹27.40 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹37.59 L
Wealth Leader
SIP (+₹37.05 L)
Year 14
Standard Loan Balance
₹24.41 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹43.64 L
Wealth Leader
SIP (+₹36.20 L)
Year 15
Standard Loan Balance
₹21.15 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹50.46 L
Wealth Leader
SIP (+₹35.23 L)
Year 16
Standard Loan Balance
₹17.60 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹58.14 L
Wealth Leader
SIP (+₹34.14 L)
Year 17
Standard Loan Balance
₹13.75 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹66.79 L
Wealth Leader
SIP (+₹32.91 L)
Year 18
Standard Loan Balance
₹9.55 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹76.54 L
Wealth Leader
SIP (+₹31.52 L)
Year 19
Standard Loan Balance
₹4.98 L
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹87.53 L
Wealth Leader
SIP (+₹29.96 L)
Year 20
Standard Loan Balance
₹101
Prepaid Loan Balance
🎉 Loan Paid Off!
SIP Investment Corpus
₹99.91 L
Wealth Leader
SIP (+₹28.21 L)

Year	Standard Loan Balance	Prepaid Loan Balance	SIP Investment Corpus	Wealth Leader
Year 1	₹49.00 L	₹47.76 L	₹1.28 L	SIP (+₹1.28 L)
Year 2	₹47.92 L	₹45.32 L	₹2.72 L	SIP (+₹2.72 L)
Year 3	₹46.74 L	₹42.66 L	₹4.35 L	SIP (+₹4.35 L)
Year 4	₹45.46 L	₹39.77 L	₹6.18 L	SIP (+₹6.18 L)
Year 5	₹44.06 L	₹36.62 L	₹8.25 L	SIP (+₹8.25 L)
Year 6	₹42.54 L	₹33.19 L	₹10.58 L	SIP (+₹10.58 L)
Year 7	₹40.89 L	₹29.47 L	₹13.20 L	SIP (+₹13.20 L)
Year 8	₹39.09 L	₹25.41 L	₹16.15 L	SIP (+₹16.15 L)
Year 9	₹37.13 L	₹20.99 L	₹19.48 L	SIP (+₹19.48 L)
Year 10	₹35.00 L	₹16.18 L	₹23.23 L	SIP (+₹23.23 L)
Year 11	₹32.68 L	₹10.95 L	₹27.46 L	SIP (+₹27.46 L)
Year 12	₹30.15 L	₹5.26 L	₹32.23 L	SIP (+₹32.23 L)
Year 13	₹27.40 L	🎉 Loan Paid Off!	₹37.59 L	SIP (+₹37.05 L)
Year 14	₹24.41 L	🎉 Loan Paid Off!	₹43.64 L	SIP (+₹36.20 L)
Year 15	₹21.15 L	🎉 Loan Paid Off!	₹50.46 L	SIP (+₹35.23 L)
Year 16	₹17.60 L	🎉 Loan Paid Off!	₹58.14 L	SIP (+₹34.14 L)
Year 17	₹13.75 L	🎉 Loan Paid Off!	₹66.79 L	SIP (+₹32.91 L)
Year 18	₹9.55 L	🎉 Loan Paid Off!	₹76.54 L	SIP (+₹31.52 L)
Year 19	₹4.98 L	🎉 Loan Paid Off!	₹87.53 L	SIP (+₹29.96 L)
Year 20	₹101	🎉 Loan Paid Off!	₹99.91 L	SIP (+₹28.21 L)

Net Wealth Trajectory Over Time (Prepayment vs SIP)

Comparing accumulated financial wealth between early prepayment + post-loan SIP vs continuous mutual fund compounding.

Prepay or invest, with your numbers

Standard Formula

D = C − W

Live Calculation (Plugging Your Values)

Monthly surplus (S):₹10,000

Interest saved by prepaying (I):₹21.79 L

SIP corpus after tax (C):₹90.58 L

Prepay path: SIP of EMI + surplus after the loan closes, after tax (W):₹68.57 L

Difference (D):₹22.01 L

Substituted Equation:

D = ₹90.58 L − ₹68.57 L = ₹22.01 L

Better option:Strategy 2: Invest in SIP

Prepaying earns a guaranteed return equal to your loan rate and is tax-free. The SIP has to beat that rate after 12.5% LTCG to win, and it carries market risk while the saving does not. Both sides here are compared after tax, which is the only fair way to read the gap.

Prepayment vs Mutual Fund SIP: Decision Framework

When to Choose Home Loan Prepayment

High Interest Rate: If loan interest rate is above 9.0%–9.5% p.a.
Risk Aversion: You prefer guaranteed, risk-free savings over market volatility.
Peace of Mind: Emotional satisfaction and mental relief of being 100% debt-free.
Job Volatility: If income is uncertain, eliminating fixed monthly EMIs reduces stress.

When to Choose Mutual Fund SIP

Return Spread: Equity returns (12–14%) comfortably beat home loan rates (8.5%).
Liquidity: Mutual fund investments can be partially redeemed in emergencies.
Power of Compounding: Money invested early has 15–20 years of compounding growth.
Tax Deduction (old regime only): On the old regime, interest on a self-occupied home is deductible up to ₹2,00,000 a year under Section 24(b), so prepaying gives some of that up. The new regime, the default, allows no such deduction on a self-occupied home.