A. Good loan is a loan which is used to invest in an asset that grows in value or generate long-term
income thereby increases net asset value by appreciation.
Example: 1. Home loan
2. Business loan (Machines, buildings, cars for business etc)
3. Education loan
Bad loan is a loan which is used to invest in an asset that decreases in value over a period of time
and decreases net asset value.
Example: 1. Car loan for personal use.
2. Phone loan
3. Consumer durable loans for personal use.
*We get TAX benefits on interest paid on good loan. There is no tax benefit on interest paid on bad
A. Up to 2 Lac interest paid on home loan / per person/ per year can be deducted from income for
tax benefit. If husband and wife both earning and take home loan up to 50-70 Lac each then total
benefit is on 4 Lac interest. If both are in 30% tax bracket, can save total 1.2 L tax per year ( 4 Lac
x 0.3 =1.2Lac).
Hence, I recommend to take home loan up to 50-70L per person, which would be enough to get
optimum tax benefit.
Note: this calculation is based on taxation year 2019, please calculate the benefits based on current
A. It is Marginal Cost of fund based Lending Rate, used to calculate lending rate by bank. It was
introduced by RBI in April 2016, to improve transmission of rate cut to borrowers. It has replaced
older Base Rate loan system.
Many people are paying EMI based on BASE RATE system which is much higher than MCLR.
IF YOU HAVE NOT SWITCHED home loan to MCLR, then Do it TOMORROW.
RBI Guidelines about MCLR:
A. yes, SBI Maxgain is a type of home loan account that helps you park your extra money to save
home loan interest. If you have Surplus fund you can deposit it in loan account and home loan
interest is charged only on the difference between principal loan amount and surplus amount in the
Max gain home loan account. Also the amount is available to withdraw anytime.
A. Optimum EMI is 50-70 K to get full tax benefits.
Adjust your EMI to that level. You can reduce duration if loan amount is less.
A. It depends on returns expected from market in near future. If Market is overvalued prepay the
loan as it may give less to negative returns in next few years. If Market is undervalued invest in
A. Take separate Business loan. Don’t mix Home loan with Business.
A. Second home get tax benefit on interest up to 2 lacs. However, you need to show certain income
from 2nd home.
A. If you are loan Intolerant then you can prepay.
A. When you put home as collateral security. It’s not home loan. You don’t get home loan benefits.
A. All interest paid on business building loan is deducted as expenses in profit and loss statement.
It’s direct benefit to tax liability.
A. Your father has to be a co-owner of house or you should transfer land in your name, to be able to
ANS: It depends on you. Obviously higher loan would be choice.
You can claim benefit from second home as well, if you have rent income from that house.
A. Home loan and Commercial loans are different from tax point of view.
A. There is NO ideal tenure. Look at OPTIMUM tax benefits and adjust tenure accordingly.
A. For investment horizon of 10 year Equity is better choice. It also depends upon your GRED
(Gold, Real estate, Equity, Debt) asset allocation. Appropriate asset allocation for diversification is
A. If you want some tax benefits then home loan is OK. But, if you have too much money then you
are beyond thinking of Tax break. No need to take home loan in second case.
A. If you have Excess cash you can make some pre payment.
A. I would NOT recommend to SELL real estate. You can increase future investment in Equity.
You are just 42 yrs old; you can balance GRED before age 50.
A: If you have passive income to cover EMI, you are FREE.
A. Home loan is cheapest loan.
A. Adjust tenure to get Maximum tax break.
1. Husband wife should be Borrower and Co Borrower
2. Husband and wife should be Owner and Co Owner
3. Both should pay EMI and person paying the EMI should take the tax benefit in that proportion.
A. Floating appears better than Fixed in falling interest rate cycle and vise versa.
A. If bank is ready to reduce spread then get it switched. If MCLR is 9.5 % then bank gives spread
0.25, 0.5, 0.75 or 1. They charge different rate to different people – check what they are offering.
In short reduce rate even if you have to pay conversion fee.
A. No.NBFC don't follow RBI rate. There rate is decided by competition.
A. 50-70L. Total 2 Lac annual interest in home loan gives max tax benefit.
Note* this is based on current (year2019) taxation. It is prudent to find out latest rules.
A. You both should transfer to Joint account and pay EMI from joint account.
A. It is better to take home loan from bank.
A. Close Top Up loan first.
A. 1) Builder can’t ask for GST for undelivered flat.
2) You can sell flat after 2 years but gains might be gone in interest.
A. Your interest will be shown as loss and carried forward in next financial year. Once you start
income from clinic you can set it off.
A. If you have Cash in hand then use cash.
A. Renting home in Mumbai is better than buying.