Posted On
3/15/2023
1:57:34 PM
by
AUTO1
CONVERT YOUR TERM LOAN IN SBI TO MAXGAIN FACILITY INTREST WILL BE .5% MORE BUT U CAN PUT YOUR SAVINGS IN THIS ACCOUNT AND TAKE IT WHEN U REQUIRE. SO INTREST WILL BE CHARGED BASED ON BELOW TOTAL LOAN - SAVINGS = FINAL AMOUNT ( INTREST APPLICABLE FOR THIS FINAL AMOUNT )
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Posted On
3/15/2023
4:18:01 PM
by
Marco
@Auto1
Thanks.
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Posted On
3/16/2023
5:01:54 AM
by
RK
Hi..In home loans, in general initial years most of the interest amount is charged by bank. From the case as 7 yrs is completed out of 15 yrs bank might have taken out major part of interest amount... .. need to know details like total loan and out standing for exact calculations , you can do with available home loan excels in Google.......in this case better option is monthly whatever additional can manage , should be used for prepay loan...if taken new loan ,they too will charge high interest amount initial years, so interest difference won''t help....
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Posted On
3/16/2023
7:34:05 AM
by
jj
My experience.
I had loan from SBI for home purchase. It was for 20 years. I paid for 10 years and still found principal amount not getting reduced much. Only slight reduction. Then checked with a friend and came to now that in the initial time our monthly payment majority goes as interest. Only a small amount is deducted from principal amount.
So the advice I got was that continue the repayment in the same way and whenever I get some cash pay to the principal amount. This way I was able to clear the loan within next six years instead of remaining 10 years.
Whenever you can spare some money pay to your home loan account.
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Posted On
3/16/2023
8:46:52 AM
by
Ajaz shaikh
Hi Marco, i have loan in IDBI for 22 years starting from Nov 2021, last month i took loan from Kuwait and closed loan in India, feel much relax now, here we pay in kd it doesnt effect much and also it is for 3 to 5 years only.
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Posted On
3/16/2023
9:38:57 AM
by
The Kay
Marco, do not take loan in Kuwait.
1. Major portion of your EMI during the last 8 years has gone for interest only. Meaning if you took loan of 50 lacs, now you have to take a loan of 35-40 lacs in Kuwait to close the SBI loan.
2. When you take new loan in Kuwait all the interest you paid in SBI will go in vain
3. Most importantly, you are seeing the 2.5% difference between India and Kuwait and you are missing the Forex rates. Good for you if KWD to INR goes down. If it goes up you end up paying more than the 2.5% difference.
I took loan in 2018 KWD to INR was around 230-235 at that time now I am paying close to 3000 Rs extra every month.
4. Your best option is to leave the loan as is with SBI and try to repay the extra money to your principal amount. This way you can bring down the loan tenure and the interest rate.
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Posted On
3/16/2023
9:55:46 AM
by
Marco
@RK: Thanks indeed. Total loan amount 30L, Remaining Balance: 14,40,783.84. Duration 15 Years. Loan availed on March 2015. Duration 15 Years. Current interest rate 9.5% p.a.. I have fund to close. But I seek advise whether it is ideal foreclose the said loan at this stage please.
@jj: Thanks. Will compare and consider your advise.
@ Ajaz: Thanks. But in my case, I think the bank have already taken interest almost against my loan as it is more than 6 years since the loan availed.
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Posted On
3/16/2023
9:57:44 AM
by
Marco
@The Kay: Thanks. Will take note of it.
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Posted On
3/16/2023
10:21:01 AM
by
True Indian
@The Kay. Please dont give wrong information. This is not true. If you take home loan from India its compounding interest whereas here its not compounding. Secondly KD rate increased and is increasing due to underperforming indian economy (INR was Rs.210 and now Rs.265 plus) especially after 2014. Hence its easier to pay off Indian loan by taking loan from Kuwait in current circumstances. You can do your research, I am saying from my experience.
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Posted On
3/16/2023
11:36:43 AM
by
The Kay
@True Indian,
Define what is compounding interest.
" Secondly KD rate increased and is increasing due to underperforming indian economy (INR was Rs.210 and now Rs.265 plus) especially after 2014". I am not discussing this.
Say if you have taken a loan in 2015 for 1000 KWD for 60 months EMI and transferred the entire money to India at 1 KWD = 210 INR, you would get 210000 in India.
Say your EMI is 10 KWD per month as an example you will pay 2100 every month during 2015. From 2016 the same 10 KWD is equal to 2200-2400 as it passes month on month. Ideally, you are supposed to pay only 2100 but you will end up paying more than 2100 for almost 4 years.
Now if you sum up the difference you paid throughout the loan tenure the interest discount you get in Kuwait is more or less equal to the extra money you have paid. You might hardly find 1-2% difference.
Read about Interest rate parity. I still doubt you will get it. Make sure you learn and understand what is Compound Interest before trying to understand Interest rate parity.
The only advantage of taking a loan in Kuwait is, Indian banks do not give personal loans for NRIs. Also, you won''t get 15-25 multiples with 5-7 years of tenure. Loans in Kuwait are beneficial for only those who know how to handle and get more than 7% pa return at today''s loan rate in Kuwait. For the rest, it is an opportunity loss, just like how people believe real estate gives superior returns.
@Marco, if you have funds sitting idle definitely go for loan closure, but don''t take a new loan in Kuwait to close it. This is the simplest advice. If you are ready to take some risks invest the lumpsum money you have in a couple of Flexi Cap funds or Index funds and keep paying your EMIs as usual. Consult a fee-only financial planner if you want to choose the second option.
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Posted On
3/16/2023
3:28:22 PM
by
Marco
Dear friends, thanks for all your advise and suggestion. As per Kay''s suggestion, I will pay extra towards the loan every year in order to close the loan within this two years. Once again, thank you IIK''ians.
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Posted On
3/16/2023
8:08:45 PM
by
RK S
@Marco, If am in your place, if I have foreclosure amount, as loan most interest is taken by bank.. with available money , instead of closure, I will look for some other project where I can make some asset. Obviously that decision depends on project nature and whether it''s economically attractive.
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Posted On
3/17/2023
2:54:28 PM
by
Kwt Ac
The key here is value depreciation (of currency) over time. No other country in the world will give loan tenure more than 5 years. Its a subsidy policy of the Indian government to enable its citizens to build housing. Imagine asking Indians to repay 50L in a 5 year period ; Indians will simply say no thank you we are not building a house. So its no trap and a privilege given by government of India ; make use of it. End point - do not close your Indian loan- the EMI will lose its value in due course.
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