Pre - EMI is a burden. How can rediff miss the tax benefit of 1.5 lacs (interest comp) and 1 lac (principal comp) which one gets if he chooses ADF option. In Pre EMI one can only claim over a span of 5 years which is a long term. Also pre - emi doesnt reduce your Principal outstanding loan amount. All pre-emi is contributed to Interest component of the Loan amount. In ADF option , principal and interest both get subtracted
Re: I dont agree with Rediff's analysis
by Meetu Meetali on Feb 22, 2012 12:21 AM Permalink
You need to remember that Sec 24 benefit of 1.5 Lacs & principal of upto 1 lacs under sec 80c is only available upon possession of house. So for uder construction property even if you pay EMI you can't claim it
Re: I dont agree with Rediff's analysis
by Murali on Jan 26, 2010 01:06 PM Permalink
Thats not correct. If you opt for Pre emi, the balance principle should be invested somewhere and when you actually start the emi, pay this accumulated money to the loan itself. So, your principle also gets reduced. I think, pre emi is always better and profit making.
Re: I dont agree with Rediff's analysis
by Murali on Jan 26, 2010 01:07 PM Permalink
Thats not correct. If you opt for Pre emi, the balance principle should be invested somewhere and when you actually start the emi, pay this accumulated money to the loan itself. So, your principle also gets reduced. I think, pre emi is always better and profit making.
Hi, We are plannign to go for a flat in Chennai and the loan amount is 40 lacs. The builder is Purvankara. The posession date is May 2010 i,e 2 years from now.
We are looking at various options in taking the loan Tranche EMI Vs ADF. In case of Full dispursement (ADF), the buider has promised a discount of around 8% which comes to around 4 lacs. Looking at the discount we feel ADF is a good option. (coz the loan amount is already very huge)
But we are not very sure what might be the problems that can come up incase of ADF ?
Can any one try to answer the following questions:
1. For example let us assume a worst case situation that the buider stops construction some time in the middle. What would happen to us as we have already dispursed the full amount ?
2. Is there any home insurance policy that we can avail and which can take care of under construction property and incase of some builder problems provide us the sum insured?
3. Are there any legal bindings behind the ADF option ?
4. Should we get anything in writing from the builder before we pay him the complete amount ?
It would be really helpful if any one of you could answer these questions as we are going to ake the loan in a week and we have to decide ont he best way.
I have applied for home loan with Birla home Finance. He has taken the processing fee in advance as well as interest for one day menitioning that the loan is disbursed in his records on 30th November but there are legal clearance that is pending and hence the cheque could not be given to the builder and the bank is expecting me to pay the first emi on the 20th stating that loan has been disbursed in the system. Can i bank charge the emi without disbursing the loan. Can someone advise what i can i do in this case.
