New Delhi, Aug. 15 -- Most home loan borrowers aspire to reduce their overall debt. This is done either by making larger EMI repayments or by making strategic prepayments. That is why, when such individuals receive a salary bonus, increment, or annual incentive, a key financial question always arises: Should the money be utilised to reduce the outstanding loan or invested elsewhere, potentially for generating higher returns? For example, in equities, mutual funds or other similar asset classes that can beat inflation and help in growth?

The answer to such questions is not straightforward. It entails many vital aspects that must be considered holistically. For instance, the interest rate on a home loan, expected investment return, level o...