The basics are informative about terms. Pl give detailed analysis of the home loan terms,whether floating rate or fixed rate of interest is benefical looking to the incometax purpose, how the home loan and its part are beneficial for tax payers and which company to go with HDFC,icici LIC etc and ratings.
RE:Home loan terms
by Ravish Sheth on Dec 21, 2006 08:24 PM Permalink
You do get tax benifit on pre-EMIs (interest paid before completion of building). But actually not before your house is completely done. You can claim tax exemption in 5 equal proportion of our pre EMI paid. And you can start claiming that from the financial year your house was ready.
RE:Home loan terms
by SRG on Dec 15, 2006 10:26 AM Permalink
Hi,
Thank you for the feed back. Some more information:
* You are liable to pay interest from the day 1 you take loan from the bank; * All the nationalized banks charge interest on daily reducing balance; and interest is applied on monthly basis; That is not so in case of private banks and varies from bank to bank and for different types of loans; * Pre -EMI - interest you have to service before you begin your EMIs; If the disbursement is in stages you pay interest only for amount so far disbursed; * I repeat - There is no tax benefit for the house is under construction;
Appraisal:
Though norms differ from bank to bank, normally, banks would be willing to sanction you such amount, where your gross out go would be up to say 50 to 60% of your gross salary.
Gross out go = EMI on home loan + PF deduction + tax + EMI on car loan (if any)+ EMI on personal loan (if any) + any other regular deduction that would be obvious on perusal of your salary account statement
EMI per 1 lakh ~ Rs 1000
You can do a rough calculation of amount for which you would be eligible
Imp: It is better to talk to employee of the respective banks than agents; Employees are liable;
The article is informative for a novice. However, as a banker working in credit department of a leading nationalized bank i would like to point out other aspects which every home buyer should know. 1st of all, pre-EMI is a con term used by private banks to trick the customer into availing of advance disbursement facility which will prove costly to a middle class buyer because usually they are the ones who face shortage while buyer a home; There is no tax benefit if your house is under construction; Pre EMI carries compound interest and not simple interest as indicated here. Margin or down payment again is a con term. While scouting of home loan. Please check whether margin of 5% is on agreement price or the entire gamut of expenses including stamp duty, registration, society charges, car parking slot, advance maintenance charges etc. Try to understand the appraisal details. Then you will understand where you stand and can do better planning. Before making payment go and cheque the municipal records for approvals. It is a simple english document and not intimating at all if you care to understand. The list goes on.
RE:HOME LOANS
by latapillai on Dec 11, 2006 11:29 PM Permalink
Thank you for the advice. What about the following terms. EMI under construction - does it benefit. I understand that the floating rate is fixed on the lending banks benchmark and not the RBIs. Lower interest rates are generally given to new loans and not existing loans. Also please do an google search to get the credability of the bank. You will be amazed to what extent the banks go to cheat you./con you
RE:HOME LOANS
by akhilesh on Dec 12, 2006 09:39 AM Permalink
Hi, SRG It was great that people like you are willing to convey the proper message to the readers like me. I am a workign professional, with 2.5 years of experience and I am looking forward to seek home loan. It was great that you have tried to clear the mist.
RE:HOME LOANS
by mamata on Dec 13, 2006 03:34 PM Permalink
i wish people like u ho are experts in thi come forward form a group or umthng and guide others o that thy rent conned by thi whole thing. i have lready had 2 bad expriences leading with 2 of the famous & reputed bank of our country.
