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Loan comparison CLP on Tranche EMI vs Downpayment with discount

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Loan comparison CLP on Tranche EMI vs Downpayment with discount

Last updated: August 21 2016
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  • #11

    #11

    Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

    Originally posted by rampande View Post
    My belief is that for a person who can afford to pay full EMI both methods are flawed from the point of view of saving accruing to him. It would be better to go for CLP but pay only pre EMI interest and invest balance money in number of instruments available giving at least 8% return.

    Why pay the principal amount in initial years and not invest it. What we pay to the bank appears too much but its value is reduced to the extent of inflation.

    Just a different thought for all to ponder.

    Regards,

    Ram Pandey

    Hi Ram Pandey,

    This issue of whether to take a loan even if you have the money yourself has been discussed elsewhere.

    We found that there is approx 1.5% cost for bank loan over own money.

    Its worth it only if you have a good use for own money - cheap at 1.5%. So for businessmen, stock traders and others with anticipated big expense (marriage, child's education etc) it makes better sense to take the loan and keep the cash - since housing loan is the cheapest loan vis-a-vis other types of loan.
    Venky (Please read watch a or before posting)

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    • #12

      #12

      Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

      Another thing..one can reduce income by deducting interest on home loan in India I guess..In this case it'll be advatageous to go for DP plan as one will pay more interest from the beginning compare to CLP plan...I don't know how exactly it works but it depends on tax slab you fall under...that could be big advantage for someof us....

      Cheers,

      Originally posted by Venkytalks View Post
      Hi Ram Pandey,

      This issue of whether to take a loan even if you have the money yourself has been discussed elsewhere.

      We found that there is approx 1.5% cost for bank loan over own money.

      Its worth it only if you have a good use for own money - cheap at 1.5%. So for businessmen, stock traders and others with anticipated big expense (marriage, child's education etc) it makes better sense to take the loan and keep the cash - since housing loan is the cheapest loan vis-a-vis other types of loan.

      Comment

      • #13

        #13

        Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

        Speaking with LICHFL for a tranche EMI type of loan (they dont call it "Tranche EMI" but flexibility to pay more than Pre EMI during the construction period is available). Hopefully, I should be able to utilize this to reduce the overall interest cost. Havent worked out all the calc, will post once I do that.

        Venky - big thanks to you for bringing this up. Maybe able to save some costs actually because of these forums.

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        • #14

          #14

          Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

          Venky, Thankyou so much for educating us about this.

          Has anyone in this forum taken loan on Tranche EMI from DFC?If yes, how was the experience?

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          • #15

            #15

            Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

            Originally posted by nparikh View Post
            Another thing..one can reduce income by deducting interest on home loan in India I guess..In this case it'll be advatageous to go for DP plan as one will pay more interest from the beginning compare to CLP plan...I don't know how exactly it works but it depends on tax slab you fall under...that could be big advantage for someof us....

            Cheers,
            Considering you are at 30% slab. Interest paid of 2 lkh in an year will get you 30% tax rebate = 60 thousand. You paid 1.40 lkh extra. There is other option to save tax, charity, it will do good to need than bank.

            tax rebate will not com into effect until possesion. Try simple loan calculator from web. 30 lkh loan will take reduce principal by principal by 1 lakh in first 2 years. you pay approx 3lkh as inerest in first year and same in 2nd.

            DP is senseless in all ways if you gng for self finance or funded by bank. CLP or Partial DP looks good options again depending on situation

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            • #16

              #16

              Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

              Originally posted by priyanka_20 View Post
              Venky, Thankyou so much for educating us about this.

              Has anyone in this forum taken loan on Tranche EMI from DFC?If yes, how was the experience?
              I have just started with my Tranche EMI with HDFC. It appears to be amazing to reduce principal.

              Bottom line is if you can afford big EMI, start from begining paying that EMI, you ll save big on interest this way than if you chose to pay only interest part.

              20 yrs loan, if strated with Tranche may become 15 yrs or less in 3 yrs till you get possesion. You save good number of years.

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              • #17

                #17

                Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

                Thnaks Venky for sharing your experience.
                I have one query "can we take Tranche EMI on partial down payment plan also"?

                If yes then which is more cost effective Tranch EMI on PDP or Tranch EMI on CLP. (as PDP will give me 11% more discount by builder, booked in Jaypee Kasa)

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                • #18

                  #18

                  Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

                  "Thanks Venky for sharing your experience."

                  thanks Amit for sharing your experience with HDFC and thanks Venky for educating me about this scheme.

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                  • #19

                    #19

                    Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

                    Need suggestion

                    I have recently (around 1.6 yrs back) taken a loan of approx 28 Lacs for a period of 15 years towards a flat I purchased on CLP. I have also recently gotten married and wanted to avoid paying full EMI to the bank (although I could based on my salary) and therefore I am only paying the interest amount which is increasing as the disbursements are made by the bank. As of now, the bank has paid around 21 Lacs and my monthly EMI, which is just the interest component, is close to 14600/=. This is less than what my actual EMI would have been i.e. around 26000/= per month.

                    Do you think this is wise? My idealogy was to pay full EMI once the entire dusbursement is done, which was a good 2 years around from when I took the loan and I expected a higher salary in future as well, and until then pay just the interest amount. By doing this, I've been able to avoid being hand to mouth after my marriage and now than its been almost 2 years, my salary is also increased about 20 % and I can manage paying full EMI. In the meantime, the flat I bought has appreciated 80% in the last 1.6 years.

                    Please suggest if this was a wise decision or have I done a mistake because if I sell my property , I'll have to pay almost entire principal and the also the pre payment charges on full principal.

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                    • #20

                      #20

                      Re : Loan comparison CLP on Tranche EMI vs Downpayment with discount

                      I think people are over complicating things. interest on home loan is around 9%. so if you have money lying around, pay off your loan with that extra money , there is not point of investing that money in fd (most fd will earn you around 8% and rate of inflation is 14 %, so if you are keeping your money in fd its value is decreasing at rate of 6%.).

                      and if you don't have money lying around, then you do not have any choice. just pay the emi or interest that you can easily afford.

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