How it affects, if your housing loan interest is increased by 1% ?

Effect of 1% hike in your Housing Loan Interest:-

Calculation of Loan Amount Rs. 35,00,000 @ 9% Interest Rate

 

Loan Tenure	EMI	Total Interest		Total Principal	Total Paid
10 Years	44,337		18,20,382	35,00,000	53.20 Lacs
15 Years	35,499		28,89,879	35,00,000	63.89 Lacs
20 Years	31,490		40,57,698	35,00,000	75.57 lacs
25 Years	29,372		53,08,314	35,00,000	88.11 Lacs

Calculation of Loan Amount Rs. 35,00,000 @ 10 % Interest Rate

Loan Tenure	EMI	Total Interest	Total Principal	Total Paid
10 Years	46,253	20,50,330	35,00,000	55.50 Lacs
15 Years	37,611	32,70,012	35,00,000	67.70 Lacs
20 Years	33,776	46,06,181	35,00,000	81.06 Lacs
25 Years	31,805	60,41,357	35,00,000	95.41 Lacs

DIFFERENCE OF 1 % INCREMENT IN HOUSING LOAN

Loan Tenure	EMI  @ 9%	EMI  @ 10%	Total Paid @ 9%	Total Paid @ 10 %	EXCESS PAYMENT
10 Years	44,337	46,253	53.20 Lacs	55.50 Lacs	2.30 Lacs
15 Years	35,499	37,611	63.89 Lacs	67.70 Lacs	3.81 Lacs
20 Years	31,490	33,776	75.57 lacs	81.06 Lacs	5.49 Lacs
25 Years	29,372	31,805	88.11 Lacs	95.41 Lacs	7.30 Lacs

So, some questions arise if interest on your housing loan is increased by 1% :

1.    Advisable to close the housing loan on earliest basis?

2.    Is it worth buying a second house for Tax Rebate Purpose?

3.    Is your house going to appreciate more than the amount paid on interest?

Answers of this question depends upon the need of an individual person.

-Manan Mankad

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Unclaimed Mutual Fund Dividends ?

What happens to unclaimed MF dividends?

There are times when mutual fund (MF) investors fail to claim their dividend or even redemption proceeds. For instance, if the address of the investor changes, the cheque is not delivered. Typically, these cheques come back to the fund house. Sometimes investors collect the cheques but forget to encash them. Fund houses estimate that unclaimed redemption is one-tenth of the total pie; the significant chunk is dividend that is not claimed or encashed on time.

The six-month waiting game

Since a cheque is valid for six months, the investor can claim the amount during this time. Many investors choose to receive their dividends and redemption proceeds by electronic clearing system (ECS). But if they, too, change their bank account without informing the fund house, the amount goes back to the fund house. Therefore, the fund house sits quiet for a period of six months.

Investing unclaimed funds

Once the six-month period expires, the cheque sent to the investor becomes invalid. As per the Securities and Exchange Board of India’s (Sebi) rules, the fund house is supposed to invest this money in money-market instruments and manage and monitor it. For this, Sebi has allowed fund houses to charge up to 50 basis points of the unclaimed amount. If an investor comes forth to claim his share of dividends or redemption proceeds, the fund house has to return him the amount as well as the appreciation earned during this tenor.

Investor education fund

After three years, the amount continues to be managed in a similar way, except that Sebi has allowed fund houses to utilize the gains (earned after the initial six-month plus the three-year period gets over) for investor education; a separate fund in which such gains can be transferred. Investors who wish to claim their dividends any time after the completion of this three-year period will get their principal (original unclaimed amount) plus gains earned in three years.

What should you do?

Though MFs send you reminders of unclaimed amounts through your email or through physical letters at least once a year, it’s always a good practice to claim your dividends on time. Earlier, when the ECS facility was not in existence, unclaimed dividends and redemption proceeds used to run into crores because physical warrants could get lost in post, or not encashed in time. We suggest you make use of the ECS facility and get dividends and redemption proceeds directly credited in your bank account. But when you change your bank account, do intimate your fund house.