What is the best way to pay off a home loan faster?

I have something better - how you can pay off your home loan and get your house for free in 20 years.
Being Indian is not easy. The societal pressure is, for the lack of a better word, crippling - score better marks than your neighbour’s son in school, get into a good undergraduate college, build your CV and crack very competitive examinations for your post grad, complete your post grad, get a job, get married, start a family, phew !
Which gets us to the last leg of societal checkbox - buy a house. Coming from a middle class family, I understand the pressure. So the least that you can do for yourself is get that house for free, by making your money work for you.
Yeah - you read that right. This can be done by being aware of the concept of compounding, that Einstein called ‘the most powerful force in the universe’ [Link]
As I’m a classy guy and I like keeping things crisp - let’s get right down to it. Let’s say you’ve chosen an amazing flat in an up & coming area in Bangalore/Delhi/Bombay/Calcutta [or anywhere for that matter] worth Rs. 80 Lakh [H in the table]. Good stuff - congratulations.
Now, you go to the ICICIs & Axis Banks of the world, & apply for a home loan. The bank is willing to fund 80% of the home value i.e. Rs. 64 Lakh [L in the table], @ 8.75% annualised interest rate for a tenure of 20 years. You will have to pay an EMI [Equated Monthly Instalment] of Rs. 56,557 [E in the table] every month for the next 20 years - so that is a mighty long commitment [you can check the calculation by entering the variables here].
Now, I will have to ask you to do something that will be slightly painful ! Apart from your EMI which you have to pay every month, I want you to take out an additional 12% of your monthly EMI amount [Rs. 6,787 in our example here; “P” in the table], & invest it in 2 or 3 mutual funds of your choice [Now I think if you can spend ~57k every month on your house, you can scrape through another 6.5k ! ]
The number that is most important to look at is F [in purple] , which is the value of your investments in 20 years. Thus, if you remove your total investment I from F, you will see that you generated ~Rs.81 Lakh, which is equal to the original cost of your house.
Assumptions: The calculations assume that mutual funds will give you a 15% annualised return. If you look at mutual funds in India over the past 20 years, quite a few have given annualised returns of ~20% - however, a lot of people will talk about survivorship bias [only looking at funds that have survived till now] and no guarantee of repetition of same trends [which are true], but in my opinion, Equity as an asset class over the next 2 decades, in the Indian economy which has practically everything working in its favour, will give substantially better returns than a fixed income bearing instrument like a bond/fixed deposit.
Hence, this is pretty much the only option available to a long term investor who wants to build wealth. And this is precisely the point of this post - to help YOU understand that even a small interest rate differential compounded over a period of time will generate financial independence [will talk about this in another post on my blog in more detail]

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