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POSTED BY ON May 7, 2012 3:12 pm COMMENTS (4)
as i understand ,now there is no prepayment penalty for housing loan as per RBI’s directive. would there be any money outflow difference in following cases:?
1. i select for 10 yrs’ period for repayment and floating rate option at the start and pay accordingly.
2.i select for 20 yrs’ period for repayment and floating rate option at the start and pay the a/m (emi) from beginning to end as i would have taken loan for 10 yrs. the same a/m as case1 above will my loan be paid within 10 yrs.?
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@ashal jauhari
thank you for your reply.
@
BanyanFA
thank you for your reply.
may i presume that if i would pay the EMI for 10 yrs’ period loan for 20 yrs’ period sanctioned loan(instead of EMI for 20 yrs’ period loan) , my loan would be fully repaid within 10 yrs’ period, provided the rate of interest same for both? i.e.the pay back period would depend only on EMI , and pre sanction period would not effect.
Dear Bharat, if you are paying EMI in a 20Y loan for a 10Y period, yes your loan ‘ll be repaid in 10Y time, provided the ROI remains same. if it increases, the closure ‘ll go higher & if it decreases, the closure ‘ll be even lower than 10Y.
thanks
Ashal
Hi Bharat,
If I was you, I shall take as much higher duration as possible, considering that I can always prepay the loan amount. The advantage of taking a large duration loan is that the monthly EMI shall be lesser and hence would give me more comfort in managing my cash flows. When ever I shall have suplus, I shall prepay the loan. Hence it would give me a flexibility to manage my cash flows much better !
Regards
BanyanFA