I am getting a home loan in India for 8.65%, 30 year term. I work in USA in H1B visa for a US based product company.
How should I go about the repayment:
Accelerated - say 6 to 7 years
Full term - take 30 years
Hybrid - say 12 to 15 years
Factors I have considered:
- USD to INR exchange rate:
- It looks like every 5 years USD increases by 15%(source). If this holds true then the monthly installment I will be paying, reduces every year. Off late this does not look like a trend, actually it has been negative.
- Interest rate:
- for 30 years, the amount i will be paying is double or even more because of the interest rate. In my naive calculation, exchange rate does not seem to trump the interest i will be paying for 30 years.
- Invest in USA:
- I could pay the loan amount for full 30 years and then invest the monthly surplus in S&P 500 or some other index fund. This also diversifies my money over 2 countries, but interest rate for 30 years of home loan seems too high to reap this benefit.
I am not sure how to make this calculation to get a clear answer. Is there a good way to factor in some of the macro-economic variables like exchange rate in my personal investment decisions.