Home Loan Revised Interest Rates | Insurance Advice

Lender	5 Years		10 Years		15 Years		20 Years
	ROI	EMI	ROI	EMI	ROI	EMI	ROI	EMI
	%		%		%		%
Banks- Indian
Allahabad Bank	9.75	2113	10.25	1336	10.50	1106	10.75	963
Bank of Baroda	10.00	2125	10.25	1336	10.50	1106	10.75	963
Bank of Rajasthan	11.00	2175	11.25	1392	11.50	1169	12.00	1102
Canara Bank	10.25	2137	10.50	1350	10.75	1121	10.75	1016
Central Bank of India	9.25	2088	10.00	1341	10.50	1105	10.50	998
Indian Bank	9.50	2100	9.75	1306	10.00	1072	10.50	995
Indian Overseas Bank	10.25	2137	10.50	1349	10.75	1121	10.75	1075
State Bank of India	10.50	2112	10.75	1322	11.00	1060	11.00	982
State Bank of Travancore	11.50	2199	11.50	1493	11.50	1168	11.50	1066
Syndicate Bank	10.00	2125	10.50	1349	10.75	1121	11.00	1032
Union Bank of India	9.25	2088	9.50	1294	9.75	1059	10.00	965
Vijaya Bank	9.25	2088	10.00	1322	10.25	1090	10.75	1016
Housing Finance Companies – Indian
Can Fin Homes Ltd	11.50	2200	11.50	1406	11.50	1169	11.50	1067
GIC Housing Finance Ltd	10.95	2172	10.95	1375	10.95	1134	10.95	1029
HDFC	11.00	2175	11.00	1378	11.00	1137	11.00	1033
LIC Housing	11.00	2174	11.00	1377	11.00	1137	11.00	1032
PNB Housing	11.00	2175	11.00	1378	11.00	1137	11.25	1050
Sundaram BNP Paribas	11.75	2212	11.75	1421	11.75	1185	11.75	1084

Source: THE HINDU * Saturday, July 26, 2008
ROI – Rate of Interest EMI – Equated Monthly Installments
Free Advice from Anand from FitnessFundas

In case husband and wife are both working, explore possibilities of getting the property registered on joint names and seeking the loan also on both names. This will enable you to claim Income Tax rebate on Principal Amount re-paid up to Rs 1.00 lakh and interest paid up to Rs 1.50 lakhs in each file. This would prove a good boon especially if the loan is for Rs 30 lakhs or more. You will not only get a better deal form the Bank, but you will save twice the amount by way of Income Tax rebates.

Before you sign up for the Home Loan, please get it secured. There are many ways to do it.

Take a Term Insurance Plan for the entire loan amount with lump-sum payment upfront. Most individuals may end up doing this as this is very lucrative to the Banks and their agents. The Banks may even offer to add the Insurance Premium amount to the Home Loan amount and make matters worse. Please read on to understand …

Take a Term Insurance Plan for the entire loan amount with Regular payment for a term equal to the term of the loan.

Take a Mortgage Insurance Plan. Here a lesser premium needs to be paid for a shorter duration

Cover the Home Loan through a good ULIP.

To compare the cost and benefits of each plan, let us assume the following:

Age of person seeking the loan = 35 years

Amount of Loan = Rs 40 lakhs

Term (or duration of the loan) = 20 years

Rate of Interest = 10%

The Cost of Insurance under each of the four schemes described above would be:

1. Rs 2,06,850 lump-sum

2. Rs 13,900 for 20 years

3. Rs 11,143 for 13 years

4. Rs 4,013 in the first year. The premiums would go on increasing gradually every year to Rs 5,292 in the sixth year, Rs 7,750 in the eleventh year, Rs 11,956 in the sixteenth year … on a level cover of Rs 40 lakhs. You could keep reducing the coverage amount every year and end up paying a lower premium while seeking life cover only for the outstanding loan amount.

As you can see, the first option is the worst one. Even if you calculate interest @ 10 % on the lump-sum amount it is far more than the annual premiums for the second option. In addition, you end up losing the principal amount.

The third option is slightly better because you pay a lesser premium for a shorter duration. The flip side is that you get only the Home Loan amount on reducing balances covered.

The fourth option is the cheapest and the best. It would make things easier if you have a good existing ULIP that allows you to increase and decrease the Death Benefit. In that case, you need to pay only the amounts mentioned above as Top Ups to offset the Cost of Insurance. Otherwise, you may have to pay higher premiums than those indicated BUT the Cost of Insurance would be the same as mentioned above.

Please ensure that you get your dream house financed and insured in the most efficient manner and enjoy saying “Home Sweet Home” every time you enter.