Coffee. Friend's question.
Should I prepay the home loan or invest the same five lakh? Pulled out a napkin. The answer depends on a single line of his ITR most people never read.
5.95pct
Case A . effective rate
Interest fully deductible. Under construction or let out. 30 pct bracket. Loan is cheaper than it looks.
VS
8.50pct
Case B . effective rate
Self occupied past the 2 lakh cap. Or new regime. Tax shield is gone. Loan costs every paisa it says.
Same brochure rate. Same EMI. Two completely different math problems. Most borrowers do not know which one they are solving.