Taking Home Loan against my FD

POSTED BY Pradyut Roy ON December 12, 2012 4:37 am COMMENTS (4)

Hello Sir/Madam,
I have a personal finance & Tax related query and looking forward to get your valuable suggestions.

I am 33 yrs old working IT professional. Yearly take home salary 65k/month.
I am planning to invest on a new property ( flat) of 40 lakhs. I already have another home with suficient space for living.
For the new investment(40 lakhs) i am planning to pay 15 laks in cash & planning to take 25 lakhs as Home loan(considering some tax saving on my salary part).
I also have a FD amount 40 lakhs.
Now my question is for this new investment (which is not something i need badly), should i take home loan (will get income tax benifits )or pay if full from my FD(In this case i loose the security net on my family) or take home loan against my FD(in this case i may get cheaper rates & Tax banefits on my salary).
Please suggest, which option is best suitable for me.

Thanks in adavance.
Pradyut.

4 replies on this article “Taking Home Loan against my FD”

  1. Pradyut Roy says:

    Thank you all for your suggestion.

  2. Credexpert says:

    Dear Mr.Roy,

    After comparing the 3 options listed by you, we advise you to take a home loan of Rs.25 lacs from a Bank or Housing Finance Company. This option will enable you to avail tax benefits under section 24 and 80 C of the Income Tax Act against your interest and principal payments. We would not recommend you liquidate the FD( as you have rightly stated, this is the security net for the family) and also would not recommend a loan against the FD as that will “lock” the FD and the funds will not be available if you ever need the money to meet any contingencies

    Regards,
    Credexpert

  3. Credexpert says:

    Dear Mr.Roy,

    After comparing the 3 options listed by you, we advise you to take a home loan of Rs.25 lacs from a Bank or Housing Finance Company. This option will enable you to avail tax benefits under section 24 and 80 C of the Income Tax Act against your interest and principal payments.

    We would not recommend you liquidate the FD( as you have rightly stated, this is the security net for the family) and also would not recommend a loan against the FD as that will “lock” the FD and the funds will not be available if you ever need the money to meet any contingencies

    Regards,
    Credexpert
    http://www.credexpert.co.in

  4. Getting a loan for any kind of tax benefits is a bad idea. especially since the property is not essential.

    Without the loan emi you can save for all your other goals like retirement etc.
    If you can determine how much you need to save for your goals and if there is a little something left ( less than 25% of your take home) then that could you be your home loan emi which will fix the loan amt. The rest comes from 15 lakhs cash and part of the FD.

    This way not all 40 lakhs will be touched.
    Besides even a part of this is a large chunk of money.If invested properly you can fund a major chunk of your retirement.
    Or at least for a few years part of the FD can be used to give monthly interest which will help with your goals emi and expenses until your salary increases

    This is how I would think.

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