Loan EMI vs SIP Compensator
Recover your full loan interest by starting a small SIP alongside.
A 'Zero Cost Loan' strategy involves starting a SIP that covers the total interest paid on a loan. For a ₹30 lakh loan at 8.5% for 20 years, a monthly SIP of roughly ₹5,500 at 12% will grow to cover the entire ₹32.5 lakh interest by the time the loan ends.
Your Inputs
Required SIP
Principal
₹30 L
Interest (Recovered)
₹32.48 L
Interest to recover
₹32,48,327
Net loan cost
₹0
Interest recovered by SIP
How this works
The 'Zero Cost Loan' Strategy
Most people view a loan as a liability, but by pairing it with a small equity SIP, you use compounding to fight interest. Because equity returns (12-14%) are typically higher than home loan rates (8-9%), the SIP amount needed is usually only 15-25% of the EMI.
Risk Factor
While the loan interest is fixed and guaranteed, SIP returns are market-linked. If equity underperforms, you might not recover the full interest. However, over a 15-20 year tenure, the probability of equity outperforming loan rates is historically very high.
Frequently asked questions
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