When paying back Housing Loan, we get some benefits in terms of reduction in taxable salary. The Principal part repaid is limited to Rs.1L (including all other items like PF, LIC etc). So, paying back more towards principal part does not give more benefits in taxable income. One has to consider this also when deciding on the amount to pay as EMI.
While taking a loan, use all avail info to decide. In 2004 when I had taken a loan, I opted for a fixed rate as against a floating rate even though fltng rate was 1 pc. lower. Today, our rate 7.5 pc seems a joke as compared to fltng rate which is 11% in cases. When deciding which bank to take a loan from, play one against another. Tell bank a that bank b is giving at this rate and most times even if bank b isn\'t giving at that rate, bank a will give it to yu!!! Note that current interest rates may not be sustainable for long as they are high.
Tha article above illustrates higher payout which means lower tenor. Most banks will not allow you to pay higher EMI than decided and most have expenses/incidentals which may not allow high EMI from the beginning. As your finances change for the better with time, you may opt to repay the entire amount with penalty which works out cheaper.
You need to opt for this only if at that time there aren\'t any investment options not paying more. Pls. remember there will always be an option that will pay more than the rate your home loan is charged at. Even if temporarily things are down, which is the case with mutual funds at the moment, they will change; you need to stay put for a while.
Whatever you decide be careful as over time, even that Rs. 1000, you saved and invested in some scheme will fetch you handsome returns
While taking a loan, use all avail info to decide. In 2004 when I had taken a loan, I opted for a fixed rate as against a floating rate even though fltng rate was 1 pc. lower. Today, our rate 7.5 pc seems a joke as compared to fltng rate which is 11% in cases. When deciding which bank to take a loan from, play one against another. Tell bank a that bank b is giving at this rate and most times even if bank b isn't giving at that rate, bank a will give it to yu!!! Note that current interest rates may not be sustainable for long as they are high.
Tha article above illustrates higher payout which means lower tenor. Most banks will not allow you to pay higher EMI than decided and most have expenses/incidentals which may not allow high EMI from the beginning. As your finances change for the better with time, you may opt to repay the entire amount with penalty which works out cheaper.
You need to opt for this only if at that time there aren't any investment options not paying more. Pls. remember there will always be an option that will pay more than the rate your home loan is charged at. Even if temporarily things are down, which is the case with mutual funds at the moment, they will change; you need to stay put for a while.
Whatever you decide be careful as over time, even that Rs. 1000, you saved and invested in some scheme will fetch you handsome returns
While taking a loan, use all avail info to decide. In 2004 when I had taken a loan, I opted for a fixed rate as against a floating rate even though fltng rate was 1 pc. lower. Today, our rate 7.5 pc seems a joke as compared to fltng rate which is 11% in cases. When deciding which bank to take a loan from, play one against another. Tell bank a that bank b is giving at this rate and most times even if bank b isn't giving at that rate, bank a will give it to yu!!! Note that current interest rates may not be sustainable for long as they are high.
Tha article above illustrates higher payout which means lower tenor. Most banks will not allow you to pay higher EMI than decided and most have expenses/incidentals which may not allow high EMI from the beginning. As your finances change for the better with time, you may opt to repay the entire amount with penalty which works out cheaper.
You need to opt for this only if at that time there aren't any investment options not paying more. Pls. remember there will always be an option that will pay more than the rate your home loan is charged at. Even if temporarily things are down, which is the case with mutual funds at the moment, they will change; you need to stay put for a while.
Whatever you decide be careful as over time, even that Rs. 1000, you saved and invested in some scheme will fetch you handsome returns
If you know that you have more repayment capability then you can ask for lesser tenure and of course lesser interest rate. This will put an obligation of paying extra emi every month. So the trade off among peace of mind . steady income and interest you are ready to pay towards your home.
This makes a lot of sense. However, I think that one should keep recurring deposits for long periods which give high returns. So lets say you start a recurring deposit of Rs. 10,000 per month for 13 months has 10% interest rate. AT one go, remove the money after 13 months and pay part of home loan. Continue till home loan is paid off in lesser duration
Or do so as the article says. Keep paying regular payment towards home loan principle. Making payments towards principle is the Best thing to do! However, do take note of pre payment charges. Take loans from banks which do not charge penalty on prepayment. Firstblue (earlier Deutsche post bank) is one such institution
