bala_bhaskar
TF Buzz
1. How will you repay or get max benefit from your housing loan account and which bank is best for it?
Please share your hacks.
Thanks in advance 🙂
Please share your hacks.
Thanks in advance 🙂
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Housing Loan Repayment Techniques
- Thread starter bala_bhaskar
- Start date
Trick is prepayment during the beginning of your loan tenure so that total interest to be paid becomes less
techsearch
TF Select
pre pay as and when you can, even minimum amount like 25k is also good, you can pay multiple times in a year
Some of the tricks I used to prepay my home loan (from a perspective of a salaried employee):
- Max your 80c limit (1.5lacs) with principal payment for your home loan.
- Whenever you get a hike increase your EMI by the percentage of your hike, so if you get a 10% hike, increase your EMI by 10% as well.
- If you are investing in mutual funds as well, redeem some portion of the corpus when the market is at an all time high and use that amount to prepay the loan.
- If you're taking 12% EPF payment, reduce that to the minimum Rs 1800 and use the extra amount for to prepay the loan (since EPF interest is ~8% and loan interest ~8.5%).
Agree to all except EPF.. Never underestimate epf earning.. it is compounded, tax free and necessary for social security.. home loan is your cheapest loan 8.5 reducing.. with tax benefits cones to around 6% nett...
Joint Loan with spouse and both claim 80c
Always Always keep renegotiating rate
Pay 1 to 2 emis extra per year
OD / Home Saver if you have large amount of cash
Axis has some 12 emi waiver home loan - read somewhere, you can explore
Increase emi vs tenure whenever you can
BlueFlash
TF Premier
Silly question: Does prepaying, lower the principal amount, and hence the interest, and that's the reason you are suggesting to prepay only/ in the initial years when the payment goes to interest mainly ?
Yes.. U r right... Prepay as early in the tenure as you can
KOTAK aggressive and flexible, will negotiate well, ok service
SBI usually the cheapest during promotion periods, service not great
HDFC reliable but not necessarily cheapest, may have gd service
SC if you have good income track - probably the best overall.. but they can be finicky with eligibility a bit.. worth exploring, great service
ICICI - Good, depends on the agent u get
LICHFL - Lowest at entry rates, horrible service after
Axis - some interesting products but not a big daddy
IDFC - New entrant, conservative, decent service
Some. small finance, co-op banks offering good rates
Icici, lichfl and hsbc have comparatively lower rates
I tried to repay min. 14 EMI/yr instead of 12 and any other adhoc pre-payment (even if it is as low as 1K) to reduce the principal amount which eventually lowers the interest as well.
Please note, there is no pre-payment charges if your HL is at floating rate.
Nemesis
TF Premier
Prepay early more when interest rates are low than when high....
Nemesis
TF Premier
You sure service is good in SC? I declined their salary account.... 😳
Which of them are fast in updating old rates with respect to market? Any studies?
agrawalshishir
TF Buzz
Personally speaking, Housing Loan is the cheapest loan one gets.
We Indians are petrified of INTEREST cos are dada, pardadas have seen zamindari system and fall prey to it as interest rates were as high as 4-8% per month.
So the saying, Jitni chaddar utne hi pair failao.
But off lately, i would only suggest to use this interest portion to set off against 80C and 2L additional exemption.
Now i can suggest you a trick where all interest gets exempted, and for business owners saving tax even if interests are more than 10-20-50Lpa by just paying 1.5% income tax of total interest.
We Indians are petrified of INTEREST cos are dada, pardadas have seen zamindari system and fall prey to it as interest rates were as high as 4-8% per month.
So the saying, Jitni chaddar utne hi pair failao.
But off lately, i would only suggest to use this interest portion to set off against 80C and 2L additional exemption.
Now i can suggest you a trick where all interest gets exempted, and for business owners saving tax even if interests are more than 10-20-50Lpa by just paying 1.5% income tax of total interest.
All have to now as per RBI.. reset generally every 2 nd month fixed date as per bank.. The catch is that you should have a benchmark linked interest rate loan.. XX rate +2.5% spread.. these will happen faster.
SC is v gd.. now with Citibank gone.. HSBC and SC standout
If you can maintain it long term.. yes.. bcoz if u switch jobs they stop all salary account benefits and then they will need different MAB requirements.. Short term needs. don't bother.. you can apply for any product without having a salary account as well
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