Query on ADF Housing Loan

POSTED BY Srikanth Mandadi ON July 2, 2013 2:46 pm COMMENTS (7)

 I had gone though your site and it has good information. I need a small clarification on housing loan. I have recently taken housing loan from ICICI under ADF so whole amount go disbursed to builder. I still dont have clarity weather I am in profit or loss. My EMI gets started from very first month and banking is taking only interest till possession. I am not worried about extra amount that I pay but wanna know which fetches me good returns. Paying only Interest or do I need to pay Principal+Interest from my first EMI? Loan is for 20 Years. At what point of time(after how many years) do I need to close my loan(doing pot payments on regular intervals) so that I will be in profit.

Best Regards, Srikanth 

7 replies on this article “Query on ADF Housing Loan”

  1. Ashal Jauhari says:
    July 3, 2013 at 10:59 am

    Dear Srikanth, the answer lies in your own reply. Principal + Interest ‘ll save you over all money towards interest payment.

    thanks

    Ashal

    Reply
  2. Srikanth Mandadi says:
    July 3, 2013 at 10:47 am

    Thanks a lot for replies. Please suggest me so that I will go ahead.

    Reply
  3. Ashal Jauhari says:
    July 3, 2013 at 10:10 am

    Dear Srikanth, how can you be in profit by paying or not paying your loan? The profit ‘ll be only if you sell the house at a price more than the total amount paid by you for house + interest.

    thanks

    Ashal

    Reply
    1. Srikanth Mandadi says:
      July 3, 2013 at 10:38 am

      Hi,

      I mean which would be better way(profitable) of repaying loan till I go into possession.
      Should I opt to pay full EMI (Principle + Interest ) or only Interest till I get possession?

      Regards,
      Srikanth

      Reply
      1. Credexpert says:
        July 3, 2013 at 11:22 am

        Dear Mr. Mandadi,

        We would strongly recommend that you repay the EMI (i.e. principal + interest) since it is a Home loan which is a long term loan.

        Yes, you could repay only the interest and invest the principal amount. But in this case you would have to ensure that the investment earns you a reasonable return and serves the purpose of not repaying the principal.

        Regards,
        Credexpert

        Reply
  4. Credexpert says:
    July 2, 2013 at 7:55 pm

    Dear Mr. Mandadi,

    If the complete sanctioned amount has been disbursed, then you should pay the EMI (principal + interest ) instead of the Pre EMI i.e. only the interest. The concept of Pre EMI applies in case where the complete loan amount is not yet disbursed and hence you pay only the interest.

    We would suggest that you start repaying the EMI and pre pay as and when your cash flows allow you to do so thereby reducing the EMI amount or the tenure.

    Regards,
    Credexpert

    Reply
    1. Srikanth Mandadi says:
      July 3, 2013 at 10:44 am

      Hi,

      Should I opt to pay full EMI (Principle + Interest ) but not only Interest till I get possession right?

      But bank guy told me that instead of paying full EMI, you can use that principle or saveinvest it for other purpose till you go in possession and use it as pot payment at that time. So I am kind of confused which would be right way. I don’t think I can invest that monthly amount which gives good returns than the amount I pay to bank, is there any way can invest it?

      Which would be right option to do invest principal or pay it to bank?

      Regards,
      Srikanth

      Reply

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