Being debt-free is bliss for homeowners, but is difficult to achieve. If you have a home loan, it is possible that you might have faced the dilemma at least once whether to make part prepayment of your home loan or invest that extra sum you might have received as your bonus. As home loan is generally one of the biggest loans one might avail of during the lifetime, and there is no prepayment penalty, you would want to get rid of it as soon as possible and be debt-free. However, making the decision whether to make part prepayment or invest the sum is not that easy in case of home loans because there are multiple factors that you need to consider, including the rate of interest on loan, remaining tenure, rate of return from the investment, tax benefit forgone on interest and principal repayment, among others. However, there are certain situations when it is advised to make the part prepayment rather than investing.

Prepayment in lump sum especially of a housing loan is only possible if you have received a huge amount from somewhere else and want to use it for prepayment. In this case, you either have the choice to prepay your loan or invest the money somewhere else. You should compare the two to see which one is more beneficial.

Before going for repayment, keep below things in mind:

• Is repayment affecting your cash needs for goals, emergencies, etc.
• Is the investment giving more return as compared to cost of a home loan?
• Consider the stage of your home loan tenure
• Check the prepayment charges, if any

The average return you can get from any investment option is x% and home loans generally are on a y% interest rate. Based on interest rates prevailing at that time, either you will save or lose. So consider all factors before taking the decision on loan prepayment.