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:

  1. Accelerated - say 6 to 7 years

  2. Full term - take 30 years

  3. Hybrid - say 12 to 15 years

Factors I have considered:

  1. 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.
  2. 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.
  3. 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.

  • 1
    It is definitely not guaranteed that an fx rate between two countries will move in a particular direction, or by a particular amount. Be careful that your forecasts and assumptions do not become 'facts' in your head when making decisions [not saying you are necessarily doing this]. Commented Oct 20, 2017 at 15:09

1 Answer 1


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

The most important thing is ensure you pay the EMI's from your NRE account. This will help you when you sell the house, you can easily move the funds to the extent you repaid the loan back to NRE account and easy for repartition.

How should I go about the repayment:

The only thing you need to consider is whether you can make an investment that will yield you more than 8.65%. If yes you invest the differential into that investment; else you repay the loan faster.

The USD INR rates today generally INR looses value. However 30 years is a long view and INR may loose value or USD may loose value. It can't be predicted. However for the property value, you income, this may or may not be material risk and can be ignored.

Interest rates in India are near low, they may fall slightly more. However again 30 years is a long view and one cannot predict if rates will go to 14% or come down to 5%.

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