Monday, August 8, 2016

Can we use money from mutual fund for home loan repayment?

The answer is definitely a BIG NO. You cannot disturb your mutual fund investment to repay the home loan instalments.
Loan obligations should be met only out of your regular income (Active Income) and certainly not by selling or disposing of any investment and certainly not by selling off stocks or mutual funds, which generate spectacular results in the long term.
Taking any loan, including a home loan is not advisable. Even if a home loan is taken, it should be a small part of one’s regular active income like salary or business income, so that a situation shall not arise that one has to consider disposing off another asset to repay the loan. Therefore please avoid repaying EMIs of your home loan by selling mutual fund. If you own any other idle immovable property try to dispose off that property and try to extinguish or reduce your home loan burden. In case you have any other alternative, then there is no choice really, is it not?
If you keep the investments in shares, mutual funds and exchange traded funds (ETFs) undisturbed for very, very long periods like 30–40 years, they can produce really fantastic results, by the operation of the law, ‘Miracle of Compounding’.

So, please try to avoid disturbing your mutual fund for repayment of home loan.

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