I have currently having maxgain with around 8 lakh surplus of 30 lakh loan with 9.25 interest. around 2 lakh principal is paid in last 3 years. loan started 2016 march with total tenure of 20 years. so currently I have book balance of -19lakh. I have PPF withdrawal eligibility of 1.3 lakh from my 5.3 lakh corpus of PPF. I am 40 yrs old salaried person. I did some calculation and observed the interest saving of 1 lakh surplus is far better than 1 lakh lying in PPF account in 8% interest. Can you please advice whether it should be wise to withdraw PPF money. I have other investment in stocks and mutual funds and doing regular SIP of 38% of my take home salary.
You can do so as the earning from PPF is not more than what you save as part of interest. However, keep two things in mind.
- As your loan tenure goes on, your earning capacity on the parked money will reduce due to interest part reduces in your EMI slowly.
- If you wisely invest the saved interest on the money which you planned to withdraw and keep in SBI MaxGain, then it is worth. Otherwise, it will end up at last just a principal.
Hence, considering these two aspects, take your conscious decision.
Thank you! For the second point, I should not not touch the saved interest(due to PPF amount) in maxgain and keep it there. Is that what you mean? or do you mean to manually invest the saved interest amount somewhere else(MF/SIP)? I know the only issue here is that accessibility of fund so one tends to spend, while in PPF account it is safe from spending.:)
Yes, your understanding is correct. Because many never bother about what is their ACTUAL earning by keeping the money in MaxGain. They feel their whole parked amount is earning equal to home loan rate and that also tax free. But the reality is that as your home loan tenure increase, your earning from this will reduce.
So in this cse what is the good option, should we remove some of parked surplus amount and keep continue paying the EMI?