Home loan emi

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sunil singhani (Querist)
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02 June 2014 I need your advice on this matter:

I had taken home loan of rs 1200000 9 years back for 15 years @ interest of 7.5%.Now due to rise in interest rates i am paying emi @ interest rate of 11.5%.I was getting income tax advantage on this as i come under 30% bracket.

I am planning to foreclose, so would you suggest to foreclose and opt for PFF for tax saving.

Please advice.

Thanks

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 June 2014 your net payout on interest is 8.05% (after tax impact). foreclosing would mean that you would repay the principal in advance leaving you with lesser capital to invest anywhere else.

So assuming that you have better options to invest in currently (means return more than 8.05%) you should not foreclose. Also, in near future stock markets are expected to rise substantially and interest rates should cool down somewhere down the line if not immediately.

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