Skip to main content

Loan from Banks vs Housing Finance Company

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

Bringing 20 per cent of a property's cost to the table isn't normally easy for a home loan borrower. Then, there is an additional cost of stamp duty and house registration, easily around ₹ 3 lakh for a house costing ₹ 50 lakh in Mumbai.

With stamp duty and registration costs of six to eight per cent in the country, housing finance companies (HFC) or non- banking financial institutions (NBFC) seem a better deal in comparison to banks.

In 2012, the Reserve Bank of India asked banks to exclude documentation and stamp duty while giving loans to home loan borrowers. So, for loans up to ₹ 20 lakh, banks can provide up to 90 per cent of the house cost. For loans above ₹ 20 lakh and up to ₹ 75 lakh, they can lend up to 80 per cent. For, loans above ₹ 75 lakh, it is 75 per cent of the house cost, excluding these charges.

In other words, buyers have to bring in a good 20- 30 per cent of the total value of the house. While HFCs and NBFCs can add stamp duty and registration amounts, their rates are marginally higher. Our customer base is those who aren't getting a home loan from banks or who need a higher amount. As they are risky customers, we charge a higher fee. Our customers are ready to pay a higher price for whatever reasons.

There isn't much of a difference between the rates offered by banks vis-a-vis HFCs. Typically, the rate differential is between 0.15 and 0.25 per cent. For a 20- year ₹ 50 lakh loan, the equated monthly instalment (EMI) for State Bank of India (10.15 per cent) and HDFC ( 10.25 per cent) would ₹ 48,749 and ₹ 49,082 or only ₹ 333. Over 240 months (20 years), this means an additional ₹ 79,920 – not too high.

If you go to a bank, you will have to pay another ₹ 3 lakh as registration and stamp duty. If you were to take ₹ 53 lakh from an HFC/ NBFC, the EMI would be ₹ 52,027. That is, ₹ 3,278 more a month or ₹ 7.87 lakh more over 20 years.

However, if you invested the same ₹ 3 lakh in a fixed deposit paying nine per cent annually, the returns after 20 years would ₹ 16.8 lakh and interest income of ₹ 13.8 lakh. In other words, the interest income is almost double the amount paid. And, there are many products like tax- free bonds where one can invest. This money, invested in equities, will give even a higher tax- free return. Customers also see the convenience.

They are more likely to approach the financial institution that has pre- approved a project. Or, an institution with which they have a long standing relation. Then, the loan processing gets faster.

Then, how do you decide? If you are a priority sector borrower (loan amount = ₹ 25 lakh or less), you will get a similar rate from all institutions. Ideally, if you are young and short of cash, it's best to go for a HFC/ NBFC. If close to retirement, try and pay the amount upfront because it will mean lesser pressure on finances in the future

The quantum of dividend shall be Rs 0.0389 per unit. The record date has been fixed as April 03, 2014.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...
Read more

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...
Read more

Lump Sum or SIP?

Invest Mutual Fund Online     You have a lump sum in hand and you wish to invest in equity funds. However, you have heard a lot of talk about investing in equity funds through Systematic Investment Plans (SIPs) because they help average costs, ensure you do not ill-time the market, and help you invest in small sums, besides giving you many other advantages. So, should you invest the money you have in hand in one go, or let it remain in your bank account and then do an SIP? There is no harm in investing a lump sum amount. For all you know, compounding, over the long term, could work better with lump sum. However, make sure you fulfill all of these three criteria if you want to invest in one go. Else, SIP is the way to go. #1: You invest for the long term According to past data, ideally, if you have a time frame of 12 years or more, you can consider lump sum investing (provided you satisfy the other two conditions that follow). So, what is the sanctity behind 12 years? Is it because only...
Read more

Why credit history is critical?

Will you need a loan to buy a car or a house? Do you know why some people get their loans sanctioned quickly without any hassle, whereas others find that their approval is delayed or their application is rejected? If you want a loan, you will need to work to build a solid credit history because this can have a bearing on the ease with which you get loans. Read on to learn more about what is a credit history and how to build a good credit score. What is a credit history? Your credit history is a way of tracking your credit behaviour and habits — basically it shows how disciplined and regular you are when it comes to repaying your dues on loans that you have taken. It will show a complete record of your past borrowing and repayment record including details about any late payments or if you have defaulted on a loan. This track record is readily accessible to lenders and is used by them to when reviewing your loan application. Borrowers who have historically had a bad record of managing...
Read more

Income tax Section 80CCF - A Tax saving Scheme that has Buyback Option IDFC Infra Bonds

IDFC has come out with a public issue of long-term infrastructure bonds in the form of secured redeemable non-convertible debentures. Investments of up to . 20,000 in these infrastructure bonds are eligible for tax exemption under section 80CCF. This is in addition to the . 1 lakh limit available under Section 80C, 80CCC and section 80CCD of the Income-Tax Act. The issue is currently open and will close for subscription on December 16. The bonds on offer have two investment options. While series 1 carries a 9% coupon, payable annually, series 2 is a cumulative option where 9% will be paid compounded annually. The face value of each bond is . 5,000 and one can apply for a minimum of two bonds. The bonds have a lock-in period of five years. At the end of five years, you can sell the bonds on NSE. Also, there is a buyback facility available. Investors can subscribe to these bonds in either the physical form or in demat form. An investment of . 20,000 would fetch a tax exemption of . 2,...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now