Should I prepay my home loan or invest in SIP?+
If your home loan rate is above 8.5% and you're in the 30% tax bracket (effective after-tax cost ~6%), equity SIP at 12% CAGR wins mathematically. But prepayment gives guaranteed, risk-free return equal to your loan rate. Rule of thumb: prepay if loan rate > 9%, invest if loan rate < 8.5% and you have 7+ years horizon. Psychologically, many prefer being debt-free — that has real value too.
Which is better — reduce EMI or reduce tenure after prepayment?+
Reduce tenure, not EMI — always. Reducing tenure saves significantly more total interest because the loan is paid off faster. Same prepayment amount: reducing tenure saves 2-3x more interest than reducing EMI. The only exception is if cash flow is very tight — then reducing EMI gives monthly breathing room.