Tips on Taking Loans/Mortgage

TAKE LOANs CORRECTLY:

Personally I do not approve of taking heavy loans but for those who want should try to DO IT BETTER, giving some tips on how to do things differently.

TOTAL FUNDING: Normally people take the flat in under construction projects & get the disbursement amounts as per the Completion of project this results in PRE-EMI payment which actually not allowed for interest claim in Income tax, however if the builder has good reputation in market for timely completion of projects, you can negotiate with the bank to Disburse the full amount of loan at one go. But only after you negotiate with the builder for Receiving interest on the money paid in advance-you should negotiate for at least 50% above the interest charged to you by the bank. other way round you can get the Sq Footage rate down or negotiate for better amenities.

GO FOR THE MAXIMUM: You should get the approval/Disbursal for the maximum amount possible even though you have money in hand, it helps if you make the same payment as Prepayment later you can claim the same in Income tax J especially now since the prepayment penalty is no-more. 

INCREASE THE ELIGIBILITY: While we know that Loan eligibility is restricted to 70-80% of Home Value, It can be extended by giving additional securities e.g. NSC certificates, Other Valuables as collateral securities for the Home loan, this aspect works because the Home loan rates are normally the cheapest. (I repeat - I am personally against taking Heavy loans)

SOME SMART PRODUCTS: SBI & HSBC have a very different Home loan product, where at the cost of small increase in interest rate you get access to a SMART LOAN, In this product Along with Loan you also open a Current account with the bank where you can deposit all the excess money lying with you, The bank will reduce the outstanding loan amount equivalent to the balance in the current account e.g. Home Loan 30 Lac-balance in Current account 5 Lac then bank will charge interest only on 25 Lac Rupees , this helps in reducing the payment period significantly at the same time having the cash at disposal for any emergencies (product names SBI MAXGAIN,HSBC SMART LOAN)

LOANS FROM NATIONALISED BANKS: While I know that dealing with nationalized banks can be real pain, pl. note you are taking liability for almost entire earning life, I suggest that you take the loans from nationalized banks as their Prepayment & Interest rate calculations are better for the individual buyer in the long term.

Will do an detailed article later on for how Smart loans & Nationalized Bank loans save you money