[07CR]

I am currently investing a huge sum (relatively speaking) of around 1.1 CR (including 10L~ interior cost) in one of the prime locations of Pune (Viman Nagar).

I have already paid 16L for the Agreement, SDR and GST. I have got a sanction of around 70L.

My first disbursement would be in September. This is my financial situation as off now-

Total savings I have currently- 13 L (Gold), 14.5L (Cash). My first demand draft to be paid in september is around 70L, of which 16L has already been paid. Till the time my flat is handed over to me I would need to pay remaining 30L and 10L interior cost. I would be using the 27.5L I have currently to decrease the loan amount, which thereby results to a loan of 54-27.5= 26.5L.

Now my wife is currently in 9th month of pregnancy and we have a second car at home (arriving this week-Fronx Delta+). For the next two years from now, I would have limited use of the car. I work from home, and my wife would be working from home for the next 7 months atleast. I would be able to use the Fronx till my flat is ready and I move out (sometime next year October-November 2025).

My current plan is to sell my Seltos GT Line DCT (Getting offers uptil 20L) and use the same to pre pay the loan. I could use the Fronx for the next year until I move out. When I move out, I would be buying a small hatch/sedan till I repay the remaining loan (26.5-20=6.5 + 40L worth EMI/direct payment to builder for the next year). I might need to use this small hatch for further 1.5 years until all the loan payment is completed + save up for another 10 months to buy a Seltos/equivalent car again. I can afford an EMI of 2.43L as of now.

Does this make sense? I am 30 currently and looking out for valuable advice the forum members would have. Do let me know if I am missing anything so that I can better offset this loan amount.

[Jaguar]

I am not exactly sure what you are looking for, but I feel you are complicating things.
Couple of advices from my end
1. Don't buy the Fronx. Keep the seltos. You are simply loosing ok depreciation.
2. Don't put all your savings into the loan especially with a baby on the way. Liquidity is the king.

Just focus on paying off the loan quickly after you move in and have settled down.

[Quatro]

Hi O7CR,

I agree with comments made by Jaguar above. To elaborate further :

1. Couple of banks have home loans which are in the nature of overdrafts. The one I am aware of are SBI, ICICI and HSBC. Here if you have surplus you can deposit it in the overdraft account and to that extent the interest will charged on net loan amount only. The interest cost on such loans is 10 to 20 basis point higher than normal loan but totally worth it.

Assuming you go for such a loan, you can deposit 27 lakhs and future income / receipts into this account and not pay interest to that extent on the loan amount. However, you are eligible to withdraw this extra money and that provides great flexibility.

You can DM me if you need any more clarification.

2. Between Fronx and Seltos, feel Seltos is a much better car and more preferable between the two. Agree that you may not need two cars, but try to see if you can give up Fronx, even if there is a small loss.

[shipnil]

Originally Posted by 07CR

Does this make sense?

Again, as said by others, not sure what exactly you are looking for? Reduce interest payment amout? Or Principal? Or utility of two cars in your life situation?

Originally Posted by Jaguar

1. Don't buy the Fronx. Keep the seltos. You are simply loosing ok depreciation.

Agree with this advice. Cancel Fronx and retain Seltos. Is the Seltos on loan too? Then there are going to be two EMIs which only you are in a position to assess if you and your wife are able to service.

BTW, I don't see utility of two cars when your wife is not going to be working for next few months and if she has WFH option going forward, then two cars is a no-no.

Originally Posted by Quatro

1. Couple of banks have home loans which are in the nature of overdrafts. The one I am aware of are SBI, ICICI and HSBC.

This is a smart option. Not sure who your banker is for HL, but if possible try to see if you can get from one of these. I use SBI HL with this overdraft facility. This basically means I can park suplus funds in the HL account and the interest is charged only on the amount remaining outstanding. The surplus that I parked, I can withdraw whenever I feel the need to.

Also, just because the HL is a big 70L, you should not be in a hurry to pay it off. If both of you are working, then you should be able to claim the loss from house property interest upto 4L per year. This would be a good income tax saving, upto 1.2 lakh per year assuming you show it as 4L. In my case, I intend to service the loan for the full tenure of 20 years.

[FanaticOnWheels]

It does look like you are complicating things a little bit.

Lot of other members have already suggested keeping the Seltos (and selling the Fronx) which makes complete sense. I assume both have no EMIs pending

Looking at your EMI affordability (2.43LPM), it is well on the higher side, so you should be very comfortably able to pay off your loan.

I had a similar loan (72L) but that was back in 2016. I took an Overdraft loan (SBI Maxgain), and kept parking surplus funds in that account. This basically means I pay interest only on the remaining amount, resulting in good amount of savings + income tax benefits.

As a new father myself, I would strongly recommend not touching your liquidity just to close your loan at this point, as there is no pressing need. Keep your savings with you/park it in a place and use it to close the loan later if a pressing need arises.

You should focus on closing your loan at the earliest, but without disturbing your savings. Very much possible. Wish you all the best and congratulations on your new home.

[Raghu M]

Like many other said, the problem is not clear. Or you have created a few through just one source. I can comment on the housing loan part. DO NOT try to pre-pay stuff by depreciating your savings. That makes no sense at all. If your home loan period is for 20 years and let's say your EMI is at 50K, try to invest 5K every month in an index fund and it will take care of the overall interest paid at the end of 20 years. Regarding the cars, you should keep what you have currently rather than buy a new one. Not sure am being of much help here.

[Geo_Ipe]

Congratulations on the new baby! Fatherhood is an amazing experience and hope you enjoy it to the fullest!

Originally Posted by 07CR

I am currently investing a huge sum (relatively speaking) of around 1.1 CR (including 10L~ interior cost) in one of the prime locations of Pune (Viman Nagar).

Now my wife is currently in 9th month of pregnancy and we have a second car at home (arriving this week-Fronx Delta+). For the next two years from now, I would have limited use of the car.

Isn't this kind of an oxymoron? Why are you buying a brand new car if you don't have a need right now!?

Also, it would be helpful if you ask specific questions regarding opinions you're seeking. Looks pretty much like all your plans are in place and more or less executed. Are you just expecting a pat on the back or genuine advice!?

Originally Posted by shipnil

Also, just because the HL is a big 70L, you should not be in a hurry to pay it off. If both of you are working, then you should be able to claim the loss from house property interest upto 4L per year. This would be a good income tax saving, upto 1.2 lakh per year assuming you show it as 4L. In my case, I intend to service the loan for the full tenure of 20 years.

Thank you sir! That's a very good piece of advice.

Originally Posted by FanaticOnWheels

As a new father myself, I would strongly recommend not touching your liquidity just to close your loan at this point, as there is no pressing need. Keep your savings with you/park it in a place and use it to close the loan later if a pressing need arises.

Originally Posted by Raghu M

DO NOT try to pre-pay stuff by depreciating your savings. That makes no sense at all. If your home loan period is for 20 years and let's say your EMI is at 50K, try to invest 5K every month in an index fund and it will take care of the overall interest paid at the end of 20 years.

As mentioned, cleaning out your entire savings is not really a good idea. Look at other methods to close the loan at the earliest. You never know what life has in store for you and you don't want to end up with zero savings.

All the best!

[Theyota]

Your savings are too low and debt high to own two cars. Unless the second car is an absolute necessity for lack of reasonable means of alternate transportation, if I were you, I would not own two cars until I build more assets.

[condor]

My suggestions:

Please do not touch your savings unless there is an emergency. This includes your PF.

Instead of a new Fronx, why not a used car for the next two years when your running will be low ? You will need a car, at least for the routine visits to hospital - and other running that must be done.

I can understand selling the Seltos since it will give you a good sum to off-set the loan.

What ever you do, with such a large home-loan, suggest to not have another loan (if you are getting the Fronx on loan). You have not mentioned this part. In case you are doing a straight cash purchase of the Fronx, then suggest divert some of that towards a used car and some towards the home loan purchase. Please also remember that you will have some unplanned additional expenses on the new house, though you have mentioned 10L for the furnishing.

[self_driven]

The Fronx will be his father's car. I remember reading this on another thread by the OP. So I don't think cancelling that is an option.

To the OP, I have nothing more to add to what members have already suggested above. Just a small piece of advice - don't sell the Seltos. It seems that there's no active loan on it. You will be taking a monetary hit now (in the form of depreciation) as well as 1.5 year later when you're in the market for a new car (prices would have increased).

[xcentrk]

Originally Posted by Theyota

Your savings are too low and debt high to own two cars. Unless the second car is an absolute necessity for lack of reasonable means of alternate transportation, if I were you, I would not own two cars until I build more assets.

Exactly my thought. If OP can pay 2.4L as EMI, why not save it? I read somewhere that the reason for the middle class people stay as middle class because of our desire to own house instead of saving. Especially without savings.

If 2.4L is put into MF SIP, with 12% expected returns for 5 years, you will get ₹1,97,96,728. Your investment will be ₹1,44,00,000. That's a cool ₹53,96,728
return for 5 years. Think about what will be the returns for 10 years or even more.

In order to take 1 Crore loan, one should have at least half of that in savings as FD, MF or gold etc. Apart from that, one should have emergency fund of 6-12 months and then cash in account. Especially in your case since you are going to be a father soon.

But, if you already have enough savings then you can proceed with the purchase.

[Dry Ice]

Originally Posted by xcentrk

If 2.4L is put into MF SIP, with 12% expected returns for 5 years, you will get ₹1,97,96,728. Your investment will be ₹1,44,00,000. That's a cool ₹53,96,728 return for 5 years. Think about what will be the returns for 10 years or even more.

Past performance is not indicative of future performance.

In all such forward looking calculations, it’s best to be conservative with the returns you expect. See index returns during a period when the market crashed to ground your expectations in reality.

[xcentrk]

Originally Posted by Dry Ice

Past performance is not indicative of future performance.

In all such forward looking calculations, it’s best to be conservative with the returns you expect. See index returns during a period when the market crashed to ground your expectations in reality.

I've been investing since 2012 and my portfolio XIRR is 18%. But I took 12% for conservative side. Even if market crashes, it tends to come up albeit not at a pace we expect.

But still, my point was to put it into savings avenue and took MF as an example. It can be anything!

[thanixravindran]

My 2 cents -
Overall cost of house: 1.1 crore to be paid in 1 year
Your direct payment part is 40L (You have means and plans to pay it in next 1 year with savings)
Your loan sanction is 70L
You already have paid 16L and ready to pay 27.5L.
By selling car, you can mop up 20L. Go for it.
This leaves a need of just 6.5L to bridge is short term.

Think whether you need to take the sanctioned Home loan with all formalities, fees of mortgage from banks etc. If I were there, I will avoid HL and will find ways to arrange 6.5L. Just do the math. But please don't break long term compounding assets for this bridge amount.

Since you can afford 2.5L EMI, you can just save it very fast and settle the 6.5L quickly as only other EMI will be of Fronx. I don't know the price of Fronx but guess EMI can be easily managed.

And I assume you will be working in a top industry/company to afford EMI of 2.5L at the age of 30, you have good medical insurance coverage (as well your wife who is working) to cover all other risks.

All the very best for the beautiful house and expansion of family. Don't overthink the financial calculations (sometimes this will be daunting for you and wife) and enjoy this period supporting your spouse and spending time with family.

[Entsurgeon]

Home loan is the cheapest loan you get in our country.
While everyone has given you reasonably accurate advise based on information you provided, I would like to present the alternative view.
Get the highest possible home loan for a given property. Save/invest your cash for whatever you wish to buy on EMI- cars, children's education, foreign trip, whatever.
This way not only burden of overall EMI would be less, you will have more money to invest in your portfolio every month for initial period.
This would work only if there will be some big ticket purchases on EMI. In old taxation scheme this also used to save you tax.