Hello Sir,
I am planning to buy an under-construction property 2-BHK flat in Bangalore directly from an owner for 70 lakhs(inclusive everything) located in Budigere Cross.
The property is constructed by a ‘A’ grade builder and scheduled to be completed in Mar-2016.
Currently I have only 20 lakhs in cash and for remaining 50 lakhs., I am planning to take a home loan for 20 years having an EMI of around 50 thousands per month.
Sine this is my first property, Could you please help me in below questions:
1. Is it advisable to take a huge loan of 50 lakhs? I am currently single and after paying EMI, I would have another 25 thousands for my monthly expenses.
2. Should I go for a normal home loan scheme or a overdraft facility and What are important points to be careful of while taking such a huge loan? I am planning to approach SBI for this.
Maverick-1) Ideally it is good to go for huge loan when you have less financial commitments. But at the same time, think twice about PROPERTY INVESTMENT. If it is for your own purpose then no value to it. However, if you are buying it for investment purpose or going for tax saving purpose, then stay away.
2) Go for over draft loan if you will expect some cash flow which you may park in OD. However, if there is no such possibility then a normal loan is better. But, we can’t predict the future. Hence, opt for OD Loan.
Thanks Sir. The purpose is basically to have a Home in Bangalore to cover rent of around 25-30K once I get married. As per understanding , at least one home is must for an individual. What do you say?For 2nd point, How a overdraft loan facility is different from Pre-payment option available in a normal loan. My bank representative said that in OD, interest rate will be higher as compare to 9.75 % interest in normal loan. Is it true?
Maverick-I don’t have any issues if this is your first home. SBI MaxGain acts exactly like normal loan. The only difference is, when you have surplus then you can park it in OD and earn some interest on this. This feature is not available with regular home loans. I think bank representative misguiding you. Because, as per the SBI portal, they have not differentiated the interest rate for regular home loan or MaxGain. Check the below link for the same.
https://www.sbi.co.in/portal/web/interest-rates/home-loans-interest-rates
Thanks Sir for a quick response and also sharing the details of MaxGain home Loan. I visited your other articles to understand the difference between Normal Loan and Max Gain and still unsure of one point: If I go for a home loan of 45 Lakhs for 20 years with an interest rate of 9.75 , the EMI comes out to be 42,684 thousand and total interest bank would be charging is 57,43,983 lakhs. Now If I go for a normal loan and try to close this loan in 7-8 years by doing pre-payment and increasing EMIs, Do I still be paying an Interest of 57,43,983 lakhs to bank anyway?The only issue I see with Max Gain is that I cannot reduce the tenure and will be tied up with Bank for 20 years. Please advice. And actually for my home purchase, I am looking for a professional help for document verification/sale process. Will you be able to help me in that or suggest someone who deals with this?
Maverick-No..If you prepay the loan and close it before 20 years then the interest part of Rs.57,43,983 will drastically reduced. This interest will be for the total tenure of 20 years. You can change the tenure in MaxGain by submitting the letter to them. The only advantage of SBI MaxGain is that if you have surplus that can be used to lower your interest outgo. If you reduce the tenure then the EMI will be raised proportionally. I said you can change the tenure only when you park the surplus in available balance.
Thanks Sir for a quick response and also sharing the details of MaxGain home Loan. I visited your other articles to understand the difference between Normal Loan and Max Gain and still unsure of one point:
If I go for a home loan of 45 Lakhs for 20 years with an interest rate of 9.75 , the EMI comes out to be 42,684 thousand and total interest bank would be charging is 57,43,983 lakhs.
Now If I go for a normal loan and try to close this loan in 7-8 years by doing pre-payment and increasing EMIs, Do I still be paying an Interest of 57,43,983 lakhs to bank anyway?
The only issue I see with Max Gain is that I cannot reduce the tenure and will be tied up with Bank for 20 years.
Please advice.
And actually for my home purchase, I am looking for a professional help for document verification/sale process. Will you be able to help me in that or suggest someone who deals with this?
Maverick-No..If you prepay the loan and close it before 20 years then the interest part of Rs.57,43,983 will drastically reduced. This interest will be for the total tenure of 20 years. You can change the tenure in MaxGain by submitting the letter to them. The only advantage of SBI MaxGain is that if you have surplus that can be used to lower your interest outgo. If you reduce the tenure then the EMI will be raised proportionally. I said you can change the tenure only when you park the surplus in available balance.
Thanks Sir. If this is the case then MaxGain is definitely better than normal loan. I was under an impression that we can park only surplus to reduce interest but still will be tied up with bank for full tenure. Thanks again for clarifying all doubts.
Maverick-Pleasure 🙂
Thanks for sharing this informative . Discussion subject is really helpful for every home buyers which is under construction.
Apartments in Wagholi
Thanks for sharing this information . Discussion subject is really helpful for every home buyers who are interested to buy under construction property.
Apartments in Wagholi