Should you prepay home loan or invest ₹20 lakh at 9% interest?
Compare the wealth delta between prepaying a 9% home loan vs. investing in a 12% SIP in 2026.
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Quick Answer:
At a 9% interest rate, **investing ₹20 Lakhs in a 12% SIP** creates **₹7.6 Lakhs extra wealth** over 5 years compared to prepaying the loan.
"Mini Summary: Investing wins mathematically if the return gap is >3% over the loan interest rate."
The "Prepay vs. Invest" debate is the most contested topic in Indian household finance. In 2026, with interest rates at 9%, the math favors the investor, but the psychology favors the debt-free.
1. The 5-Year Wealth Showdown
Invest vs Prepay (₹20L Principal)
+₹7,64,000
Extra Wealth if Invested at 12%
The Decision Verdict
Invest if your loan rate is < 9% and you have a 12%+ investment opportunity.
Prepay if you are close to retirement or have a high-stress occupation where debt-free status is a safety net.
Assumptions: Loan interest at 9%. Investment return at 12%. Calculations are illustrative.
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eCalcy Editorial Team · Financial Content Specialist
Last Reviewed: August 2026
Every article published on eCalcy is reviewed against public sources such as RBI monetary policy frameworks, SEBI regulatory guidelines, and Union Budget 2025-26 provisions. Our editorial team does not accept payment for content rankings. This guide is educational only — not personalized financial, legal, or tax advice. Please consult a SEBI-registered advisor before acting.
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