Home loan prepayment vs investing: Where should extra cash go?

When you borrow money from a bank to buy a house, you have to pay it back little by little every month, plus some extra money called interest.

Interest is like a fee the bank charges for letting you use its money.

If you get some extra cash, like a bonus at work, you have two choices.

You can give some of that money to the bank early, which is called prepayment, and that lowers how much interest you will pay later.

Or you can put the money into investments, like stocks or mutual funds, hoping they grow and earn more money.

The best choice depends on how much your loan costs compared to what your investments might earn.

Paying early is often smart because interest is calculated on the money you still owe, so a smaller loan means less interest.

But you should always keep some emergency savings so you are not left without money for urgent needs.

A financial expert advises that people should think carefully about their situation and talk to a certified financial advisor before deciding.

There is no one-size-fits-all answer for everyone.