### Advice on Pre EMI vs Down Payment.

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- Originally Posted by newbie2013I am planning to take a HL of 40 Lacs. My flat posession is expected with in a year. The builder is giving me DP, Felxi and Installment Options. Flexi and installment are almost similar except that in flexi i pay around 50% in 3 months.

Unit area is 1150sqft

The BSP is DP=Flexi-100 and installment is Flexi+100

I am confused which plan to opt for with HL. Will I benefit if I go with flexi or installment plan and opt for Pre-Emi for 1 year. Or whether i will benefit by opting DP and save in BSP.

please advice

Can you please post interval at which you would be paying what percentage in flexi and DP? Like in FLexi u are paying 50% in 3 months, rest on possession? I think it would be more frequent. If you can put approx intervals of % payment in flexi and installment we can hv precise amount calculation.

What I understood is in DP in comparision to flexi u would be saving 1,15,000 Rs + Taxes, but would be paying more interest(if 50% on possession than approx 2 Lakhs).CommentQuote0Flag - Originally Posted by TheBOSSCan you please post interval at which you would be paying what percentage in flexi and DP? Like in FLexi u are paying 50% in 3 months, rest on possession? I think it would be more frequent. If you can put approx intervals of % payment in flexi and installment we can hv precise amount calculation.

What I understood is in DP in comparision to flexi u would be saving 1,15,000 Rs + Taxes, but would be paying more interest(if 50% on possession than approx 2 Lakhs).

Also approx total cost of flat i.e. when u say 50% in 3 months how much of loan amount u would be needing.CommentQuote0Flag - Originally Posted by TheBOSSCan you please post interval at which you would be paying what percentage in flexi and DP? Like in FLexi u are paying 50% in 3 months, rest on possession? I think it would be more frequent. If you can put approx intervals of % payment in flexi and installment we can hv precise amount calculation.

What I understood is in DP in comparision to flexi u would be saving 1,15,000 Rs + Taxes, but would be paying more interest(if 50% on possession than approx 2 Lakhs).

Aprox Total Cost is 65 Lacs. However my loan amount will be 40 Lacs (Also one more query in this aspect. Will the bank disburse only 80% of the demand ? i.e. if i need to pay 45% , will bank give only 85% of the 45% amount and rest I should pay ? )

Details of Flexi

---------------

15% Booking

45 % in 1 Month

10 % After 5 Months

10% After 7 Months

10% after 10 Months

10 % on Possession

Details of Alternate Plan

--------------------------

15% Booking

25 % in 1 Month

10% After 4 Months

10% After 6 Months

10% After 8 Months

10% After 10 Months

10% After 12 Months

10% on Posession

DP is 15% on Booking and Rest 85 % in 45 Days

Thankful if a detailed calculation is made.CommentQuote0Flag - Originally Posted by newbie2013Aprox Total Cost is 65 Lacs. However my loan amount will be 40 Lacs (Also one more query in this aspect. Will the bank disburse only 80% of the demand ? i.e. if i need to pay 45% , will bank give only 85% of the 45% amount and rest I should pay ? )

Details of Flexi

---------------

15% Booking

45 % in 1 Month

10 % After 5 Months

10% After 7 Months

10% after 10 Months

10 % on Possession

Details of Alternate Plan

--------------------------

15% Booking

25 % in 1 Month

10% After 4 Months

10% After 6 Months

10% After 8 Months

10% After 10 Months

10% After 12 Months

10% on Posession

DP is 15% on Booking and Rest 85 % in 45 Days

Thankful if a detailed calculation is made.

Clarification on the first part - In my opinion, if you're taking only 40 L from bank (for a property of 65 L), you have to make payment of 25 Lakhs first to the builder before claiming disbursement from the 40L of loan amount,

Second part requires a detailed calculation. some maths wizard can help!!CommentQuote0Flag - Originally Posted by newbie2013Aprox Total Cost is 65 Lacs. However my loan amount will be 40 Lacs (Also one more query in this aspect. Will the bank disburse only 80% of the demand ? i.e. if i need to pay 45% , will bank give only 85% of the 45% amount and rest I should pay ? )

Details of Flexi

---------------

15% Booking

45 % in 1 Month

10 % After 5 Months

10% After 7 Months

10% after 10 Months

10 % on Possession

Details of Alternate Plan

--------------------------

15% Booking

25 % in 1 Month

10% After 4 Months

10% After 6 Months

10% After 8 Months

10% After 10 Months

10% After 12 Months

10% on Posession

DP is 15% on Booking and Rest 85 % in 45 Days

Thankful if a detailed calculation is made.

Bank requires you to pay 20% of flat cost. If you are paying more good enough bank will fund rest. ALthough do remember bank wont be paying service tax, in each installment you would be paying service tax yourself

Assumptions: Ur flat costs 65 L in Flexi plan. and you have 25 L funds available, and 40 Lakh loan. Extra amount saved in DP would lesser loan taken. and extra amont required in alternative plan is extra loan taken. I have ignored service tax for calculation as, anyways you would be bearing the burden from your own funds.

Based on these assumptions, following is rough calculation of difference in money paid interest - discount + additional cost of money paid.

DP PLAN

Flat cost = 6500000 - discount 1,15,000

Booking 975000 - Cash

1 Month Loan Amount = 40 L - discount 1,15,000

interest 10.75% minus discount = 267834

FLEXI

Booking 975000 - Cash

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

12 Month/Possession 10% 650000 (Interest 0)

Total Interest: 219477

ALTERNATE PLAN

Booking 975000 - Cash

1 Month 1625000 (Loan 100000), Interest = 10750

4 Month 650000, Interest = 46583

6 Month 650000, Interest = 34937

8 Month 650000, Interest = 23291

10Month 650000, Interest = 11645

12 Month 10% + 10% 1300000 (Interest 0)

Interest: 116456

Extra Price Amount: 1,15,000

Total Money: 231456

add interest paid on extra amount: Minus 11332

Total : 242788CommentQuote0Flag - Originally Posted by TheBOSSBank requires you to pay 20% of flat cost. If you are paying more good enough bank will fund rest. ALthough do remember bank wont be paying service tax, in each installment you would be paying service tax yourself

Assumptions: Ur flat costs 65 L in Flexi plan. and you have 25 L funds available, and 40 Lakh loan. Extra amount saved in DP would lesser loan taken. and extra amont required in alternative plan is extra loan taken. I have ignored service tax for calculation as, anyways you would be bearing the burden from your own funds.

Based on these assumptions, following is rough calculation of difference in money paid interest - discount + additional cost of money paid.

DP PLAN

Flat cost = 6500000 - discount 1,15,000

Booking 975000 - Cash

1 Month Loan Amount = 40 L - discount 1,15,000

interest 10.75% minus discount = 267834

FLEXI

Booking 975000 - Cash

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

12 Month/Possession 10% 650000 (Interest 0)

Total Interest: 219477

ALTERNATE PLAN

Booking 975000 - Cash

1 Month 1625000 (Loan 100000), Interest = 10750

4 Month 650000, Interest = 46583

6 Month 650000, Interest = 34937

8 Month 650000, Interest = 23291

10Month 650000, Interest = 11645

12 Month 10% + 10% 1300000 (Interest 0)

Interest: 116456

Extra Price Amount: 1,15,000

Total Money: 231456

add interest paid on extra amount: Minus 11332

Total : 242788

Forgot to mention, based on above we have a winner - FLEXI :bab (59):CommentQuote1Flag - Originally Posted by TheBOSSBank requires you to pay 20% of flat cost. If you are paying more good enough bank will fund rest. ALthough do remember bank wont be paying service tax, in each installment you would be paying service tax yourself

Assumptions: Ur flat costs 65 L in Flexi plan. and you have 25 L funds available, and 40 Lakh loan. Extra amount saved in DP would lesser loan taken. and extra amont required in alternative plan is extra loan taken. I have ignored service tax for calculation as, anyways you would be bearing the burden from your own funds.

Based on these assumptions, following is rough calculation of difference in money paid interest - discount + additional cost of money paid.

DP PLAN

Flat cost = 6500000 - discount 1,15,000

Booking 975000 - Cash

1 Month Loan Amount = 40 L - discount 1,15,000

interest 10.75% minus discount = 267834

FLEXI

Booking 975000 - Cash

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

12 Month/Possession 10% 650000 (Interest 0)

Total Interest: 219477

ALTERNATE PLAN

Booking 975000 - Cash

1 Month 1625000 (Loan 100000), Interest = 10750

4 Month 650000, Interest = 46583

6 Month 650000, Interest = 34937

8 Month 650000, Interest = 23291

10Month 650000, Interest = 11645

12 Month 10% + 10% 1300000 (Interest 0)

Interest: 116456

Extra Price Amount: 1,15,000

Total Money: 231456

add interest paid on extra amount: Minus 11332

Total : 242788

Thanks for the detailed calculation. However I have a doubt.

Why the interest is reducing? (Eg. For 1000000 in Month 1 interest is 10750, where as at the end of 10th Month when Loan Amount of 3600000 is disbursed the interest is 11645) & for Flexi

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

Please clarify.

ThanksCommentQuote0Flag - omg looks like maths classCommentQuote1Flag
- Originally Posted by newbie2013Thanks for the detailed calculation. However I have a doubt.

Why the interest is reducing? (Eg. For 1000000 in Month 1 interest is 10750, where as at the end of 10th Month when Loan Amount of 3600000 is disbursed the interest is 11645) & for Flexi

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

Please clarify.

Thanks

As I said this is interest accumulated over a year, which happen to be possession in your case. So this calculation was for 12 months only, as after that difference in plan will not have any significance(as we are accounting discount and interest over that too here).

The interest is decreasing as duration is decreasing, w.r.t end of year.

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

---> Here loan amount is big and duration is 11 months to a year.

5 Month 650000, Interest = 40760

---> Here duration for interest calculation is 7 months to a year.

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

---> similarly duration for interest calculation is 5 months and 2 months here, to a year.

Please do let me know if that doesnt make sense.CommentQuote0Flag - Originally Posted by TheBOSSAs I said this is interest accumulated over a year, which happen to be possession in your case. So this calculation was for 12 months only, as after that difference in plan will not have any significance(as we are accounting discount and interest over that too here).

The interest is decreasing as duration is decreasing, w.r.t end of year.

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

---> Here loan amount is big and duration is 11 months to a year.

5 Month 650000, Interest = 40760

---> Here duration for interest calculation is 7 months to a year.

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

---> similarly duration for interest calculation is 5 months and 2 months here, to a year.

Please do let me know if that doesn't make sense.

What I dont like about the calculation is, its not accounting service tax. You would be paying some decent amount in beginning of year in DP case and splitting it in Flexi and alternative.

The reason I ignored it was it required more details w.r.t. type of installment(basic and car parking attract 3.09% while I guess 12.36 for PLCs), as asking that much detail and including that would have made calculation look complex and that was anyways -ve point for DP which anyways doesnt look that attractive option with kind of funds we want to take on loan.CommentQuote1Flag - it boils down to the fact what you are getting from DP. i.e. - if your DP disc. > pre-emi go for it.CommentQuote0Flag
- Thanks. I got some clarity on the issue.

Now i need to negotiate with the builder to reduce the rates a bit . Hope I will succeed.CommentQuote0Flag - Originally Posted by TheBOSSBank requires you to pay 20% of flat cost. If you are paying more good enough bank will fund rest. ALthough do remember bank wont be paying service tax, in each installment you would be paying service tax yourself

Assumptions: Ur flat costs 65 L in Flexi plan. and you have 25 L funds available, and 40 Lakh loan. Extra amount saved in DP would lesser loan taken. and extra amont required in alternative plan is extra loan taken. I have ignored service tax for calculation as, anyways you would be bearing the burden from your own funds.

Based on these assumptions, following is rough calculation of difference in money paid interest - discount + additional cost of money paid.

DP PLAN

Flat cost = 6500000 - discount 1,15,000

Booking 975000 - Cash

1 Month Loan Amount = 40 L - discount 1,15,000

interest 10.75% minus discount = 267834

FLEXI

Booking 975000 - Cash

1 Month - 2925000 (LoanAmount: - 1400000) Interest 137958

5 Month 650000, Interest = 40760

7 Month 650000, Interest = 29114

10Month 650000, Interest = 11645

12 Month/Possession 10% 650000 (Interest 0)

Total Interest: 219477

ALTERNATE PLAN

Booking 975000 - Cash

1 Month 1625000 (Loan 100000), Interest = 10750

4 Month 650000, Interest = 46583

6 Month 650000, Interest = 34937

8 Month 650000, Interest = 23291

10Month 650000, Interest = 11645

12 Month 10% + 10% 1300000 (Interest 0)

Interest: 116456

Extra Price Amount: 1,15,000

Total Money: 231456

add interest paid on extra amount: Minus 11332

Total : 242788

I have one more doubt.

When the Builder is asking for 45% of the amount, How much does the bank release?

Is it the 80% of 45% of Porperty Value or 45% of the loan amount ???

For example If my Poperty Value is 60Lacs (excluding Taxes etc)

My Loan Amount is Say 40 Lacs

Now if the Builder demands 45% payment (ie. 27 Lacs), how much will the bank pay? will it be 21.6 Lacs (80% of 27 Lacs) or 18 Lacs (45% of 40 Lacs) ??CommentQuote0Flag - Please reply :)CommentQuote0Flag
- Originally Posted by newbie2013I have one more doubt.

When the Builder is asking for 45% of the amount, How much does the bank release?

Is it the 80% of 45% of Porperty Value or 45% of the loan amount ???

For example If my Poperty Value is 60Lacs (excluding Taxes etc)

My Loan Amount is Say 40 Lacs

Now if the Builder demands 45% payment (ie. 27 Lacs), how much will the bank pay? will it be 21.6 Lacs (80% of 27 Lacs) or 18 Lacs (45% of 40 Lacs) ??

Let me get the query right.

Your property is approx 60 Lakhs, loan is 40 Lakhs(not 48 Lakhs, which is 80% of 60 Lakhs). You have already paid booking amount 15%, which is about 9 Lakhs. In next demand, 45%, how much bank will disperse?

General thumb rule is bank likes its risk to be minimum. If want buyer to pay (property cost - Loan Amount) delta first, before starting disbursement.

So if your property if 60 Lakhs and your loan amount is 40 Lakhs, and ypu have already paid 9 lakhs than you need to pay 11 lakhs yourself and bank will pay rest of amount(I guess 16 lakhs in this case).

This is general thumb rule, not a rigid rule that bank follow. Private banks can be bit flexible on case by case basis. They may Disburse bit more and ask you to make equal payments in next demands.CommentQuote0Flag