Hi,good article but in india large part of middle class is not able to buy that costly flat so there is no option for that. And you should take care of appreciation that you get on property. I just take one example Tom bought a flat in Mumbai ,Hiranandani Garden in 10 lack in 1999 after 11 he also pay installment for that. Now this flat a worth of 85 lack Tax benifit He stay there and save rent for last 11 Yr. so you can benifit from that deal but take that property as assets, not liability so you take of appreciation in coming future and make profit for that.
Although the article makes sense from a number game point of view..its far from reality in most of the average middle class borrower. The assumption is the whole of balance due is prepaid at the end of 4th year. Now how many salaried class can afford such a huge amount in just 4yrs. if he is expecting this big amount, he might as well wait and not even take a loan. The reality is most of them prepay small amounts like what they get as bonus etc and would take 10-12yrs to prepay and close a 20yr loan. Hence this is a dream article for most of the salaried class. lets stick to reality rediff.
The article is just dealing with the numbers assuming nothing changes, if it is a floating interest then, 10.5% will definetly fluctuate. Also the tax that can be saved coz of the loan taken is also not considered. It would be great if we get the articles cosidering all these things, which will really help the readers in making some good decision
Author of this article is too optimistic and the article figures are unrealistic. Author is not concluded anything...Though he put efforts in making out numbers, but doesn't given enough reasons to prove his point. Good luck next time.
In many developed countries, many banks are failing. In US, few hundred banks have closed in the last two years. If you have money in one of the failed bank, the insurer of the bank (FDIC) pays only upto $100,000. Rest of the money is forfietied. If you could have prepaid a portion of your loan, you would save so much. Though one would have planned to pay the mortgage using this money, all of a sudden you will need to look out for other means to fund your mortgage. If you have a loan with the failed bank, you still have to pay it back to FDIC in full (not just $100,000 :)).
Hi, I am writing to all fools who are criticising this article, This article is a million dollar article. (1)after reading sevaral readers comments, he is not taking a loan to clear up this, maybe he might have gone onsite, and has earneda hell of money, so he wants to repay instead of carrying the burden (2) This is very very true, why the hell to close the EMI, just park the same money for pre closure into mutual fund, SIP, govt bonds. first of all he has to pay a fine for pre closing this, secondly he is putting all his money for no returns in closing this. rather go by this fellows sound advice, he wil earn close to 5-6crores of money. Dont know how this article is a bad 1
Re: all fools here
by sk ms on May 29, 2010 06:37 PM
Great... I appreciate your knowledge :-) I hope you get the million dollar ..ha ha.. 1)If he has his own funds like from onsite or earned lot of money then he need not pay fine for prepayment unless he has taken from the fraud banks who dont have this clause. Most good banks have it. 2)If he close the loan he can still invest in SIPs every month with the money he would have otherwise used to pay EMI. By definition SIP is systematic so he can still do that ..Most learned investors says SIP is better than lumpsum investment as you can never time the market. 3)If he invent lumpsum then that amount will earn him say a decent 12-15% agreed. But the EMI he continue to pay will be mostly going towards interest ..On other hand if he pre pay and the use the monthly amount that he would have otherwise used for EMI to invest in SIP thenentire amount is going towards investment . 4)Anyways as long as one do not put unrealistic numbers like 26.85% annual interest etc.. one dont need great tools. just take a simple excel sheet and check.. But dont ignore or pretent to ignore some benefits on both options..and check it for yourself.. 5)I know there are paid articles.. didn't know that there are paid comments as well :-)
Re: Re: all fools here
by lloyd mendonca on May 31, 2010 12:08 AM
Mr. GunsNroses.. Your financial knowledge along with the writer only would help prosper the bank.... If you are in school and thinking of ur self as smart then you are, but if you are grown up (which I doubt you are) you would never do that... All the best...
