I am interested in going for a housing loan for purchase of flat. I wanted to know whether repayment of EMI can be done after getting the occupancy certificate or after 2 years which is later.

Ans: If the apartment cost is below 33 lakh then you can get a 90 per cent of the flat cost (not including stamp duty/registration charges) as a loan. 

As long as the project is registered with RERA and approved by the concerned lender you will get a choice between paying just interest till possession (called pre-EMI in banking jargon) or starting off the EMI on the disbursed amount. The choice is yours.

During the years in which the property remains under construction no tax benefits are available for any loan payment – whether interest or principal. 

Finally, don’t buy under-construction flats where delays are rife. Just buy a ready to move in flat.

Ans: When you repay any part of the loan and that too very early during your loan tenure, you save a considerable amount of future interest. Also, the current interest rates being very high, it will always be good for you to prepay some part of the loan now, if you have the money. Every repayment reduces the tenure of your loan, which is what is bringing down your overall loan interet. Pre-payment has nothing to do with the possession of your house technically. I suggest you to go ahead and prepay now than wait, if you have the money.

Ans: Unfortunately, I don't have access to your previous queries.Best Regards,

But generally, for a home loan with a high interest rate of 9%, it's usually recommended to start repaying the loan as early as possible to minimize the total interest paid over the loan term. Even though you haven't received possession of the property yet, repaying the loan can bring you benefits like:

Reduced interest burden: The sooner you start repaying, the less interest you will accrue over the loan term.
Improved credit score: Regular EMI payments can improve your credit score, making it easier to secure loans in the future and potentially at better interest rates.
However, there are also some factors to consider before making a decision:

Prepayment penalty: Some banks might have prepayment penalties for paying off the loan before the end of the term. Check your loan agreement for any such clauses.
Need for emergency funds: It's important to maintain an emergency fund to cover unexpected expenses. Ensure you have sufficient funds set aside before using your surplus for loan repayments.
If you're unsure about whether to start repaying the loan now or wait until possession, it's advisable to consult with a financial advisor. They can consider your specific financial situation and recommend the best course of action.
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Taking a home loan is a significant financial decision. Your goal to repay the loan before the tenure ends is commendable. Let's explore various strategies to achieve this goal, considering your financial profile and objectives.

Understanding Your Current Financial Situation
You are 32 years old, with a monthly income of Rs. 51,000. You have taken a home loan of Rs. 25 lakhs at an interest rate of 8.75% for 15 years, resulting in an EMI of Rs. 24,000. This EMI constitutes a substantial portion of your monthly income.

Budgeting and Cash Flow Management
Effective budgeting is crucial. Track your expenses meticulously. Identify areas where you can cut costs. Allocate more funds towards your loan repayment. This disciplined approach will free up money for additional EMI payments or lump-sum prepayments.

Setting Up an Emergency Fund
Ensure you have an emergency fund. This fund should cover at least six months of your expenses, including your EMI. It acts as a financial cushion, preventing you from defaulting on your EMI in case of unforeseen circumstances.

Increasing Your EMI Payments
One of the most straightforward ways to repay your loan early is by increasing your EMI payments. If you can afford to pay more than Rs. 24,000 per month, do so. Even a small increase can significantly reduce your loan tenure and interest burden.

Making Lump-Sum Prepayments
Utilize bonuses, incentives, or any windfall gains to make lump-sum prepayments towards your loan. Most lenders allow you to make prepayments without any penalties. This reduces the principal amount, leading to lower interest and a shorter loan tenure.

Prioritizing High-Interest Debt
If you have other high-interest debts, prioritize repaying them first. Once these are cleared, channel the freed-up funds towards your home loan. This strategy ensures you save more on interest payments in the long run.

Exploring Additional Income Sources
Consider supplementing your income with part-time work or freelance opportunities. The additional income can be directed towards your loan repayment. This approach not only accelerates loan repayment but also enhances your financial stability.

Reviewing and Adjusting Your Investments
Evaluate your current investment portfolio. Ensure that it aligns with your goal of early loan repayment. If you have low-yielding or non-essential investments, consider liquidating them to make prepayments towards your loan.

Benefits of Actively Managed Funds
When considering investments, it's important to focus on actively managed funds. Unlike index funds, which merely track the market, actively managed funds aim to outperform the market. They provide the benefit of professional management and the potential for higher returns.

Regular Funds Through Certified Financial Planner
Investing through a certified financial planner (CFP) has its advantages. Regular funds managed by a CFP can offer personalized advice and ongoing support. This guidance can help you optimize your investments for better returns and achieve your financial goals efficiently.

Utilizing Tax Benefits
Maximize the tax benefits available on your home loan. Under Section 80C, you can claim a deduction of up to Rs. 1.5 lakhs on the principal repayment. Additionally, under Section 24(b), you can claim a deduction of up to Rs. 2 lakhs on the interest paid. These deductions can reduce your taxable income, resulting in tax savings.

Staying Financially Disciplined
Maintaining financial discipline is key to early loan repayment. Avoid unnecessary expenses and impulsive purchases. Stick to your budget and prioritize loan repayment. This disciplined approach will ensure steady progress towards your goal.

Reviewing Your Loan Regularly
Regularly review your loan and financial situation. Assess your progress and make necessary adjustments to your repayment strategy. This proactive approach will keep you on track and help you identify opportunities for faster loan repayment.

Seeking Professional Advice
Consider consulting a certified financial planner (CFP) for personalized advice. A CFP can provide a comprehensive financial plan tailored to your situation. They can help you optimize your investments, manage risks, and achieve your financial goals efficiently.

Final Insights
Repaying your home loan before the tenure ends is a realistic goal with proper planning and discipline. Focus on effective budgeting, increasing EMI payments, making lump-sum prepayments, and optimizing your investments. Seek professional advice when needed to ensure you stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in