Home Loan: Home loans don't always result in losses; smart investors can also make profits from them, Learn how...

If you have ₹50 lakh, instead of investing the entire amount in a house, invest only ₹10 lakh as a down payment and take out a home loan. Invest the remaining ₹40 lakh in mutual funds. This amount could grow to around ₹3.85 crore after 20 years, opening up a path to smart earning.

Home loans typically pay an average interest rate of 9%, while mutual funds can yield returns of around 12% or more. This means you get an additional 3% return. Over the long term, this difference can translate into not just lakhs, but crores, which is impossible if you buy a house in cash.

Both the interest and principal on home loans are tax-deductible. Under Sections 80C and 24(b), you can save up to ₹2 lakh in taxes each year. This means that taking a loan will not only buy you a house but also increase your net income through tax savings.

Buying a house in cash keeps all your money locked up in one place. But by taking out a loan, you create two assets simultaneously: a home and a growing investment portfolio. This means you grow your wealth in two ways, while also reducing risk.

If you're confident that property prices will rise significantly in the future, buying with cash may be a good idea. However, if the market is stable, investing in a loan is a better option. This way, you'll continue to earn returns on your money and gradually repay the loan.

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