How Offset Home Loans Balance?

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

 

How Offset Housing Loan Balance?

The borrower's salary account can also be linked for this purpose, from which he or she will have to make only judicious withdrawals going forward to ensure a surplus balance. Banks will usually encourage customers who are contemplating this route to use the salary account option.

 

 

Offset balance home loan is an arrangement that some banks offer to customers who do not have the funds or saving ability to prepay their loans. In this arrangement, the client needs to deposit whatever extra income is available into a current account, which is the offset against the outstanding amount on the home loan.

 

The borrower's salary account can also be linked for this purpose, from which he or she will have to make only judicious withdrawals going forward to ensure a surplus balance. Banks will usually encourage customers who are contemplating this route to use the salary account option.

 

In many cases, offset interest home loans can be more advantageous than prepaying the loan. With this product, the customer can potentially reduce the tenure or the loan and also save on interest. In the case of prepayment, banks usually require a minimum amount be paid, but this is not required with an offset balance home loan.

 

The bank calculates the interest on the basis of daily reducing balance. The downside of the offset balance home loan is that the chargeable interest is higher than for a conventional home loan – usually by 25-50 basis points. Also, if the loan is linked to a salary account of someone without the ability to save prudently, the arrangement can backfire.

 

Offset interest home loans may be suitable for individuals who are not in the habit of saving regularly or prudently. This makes prepayment of a home loan in part or eventually in whole impossible for them, so such a product would probably be their only viable recourse.

 

However, it is actually wiser to invest one's surplus funds diligently in some other instrument such as mutual funds . The proceeds of such an investment on maturity can be used to prepay the home loan at a predictable time.

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

3. DSP BlackRock Tax Saver Fund
4. 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