Category: Finance

Broadly speaking, there are two types of loans that one can avail in India- secured and unsecured. Secured loans, as the name suggests, are those loans where you have to keep an asset as security against the borrowed money with a transfer of interest of that asset to the financial institution.

A loan against property is a form of secured loan where you have to keep one or more of your properties as mortgage. It is one of the most preferred types of loans in India because of the numerous benefits that they come with.

How Does A Loan Against Property Work?

As mentioned earlier, a loan against property in India is sanctioned by keeping a property as a mortgage. It can be either a residential or commercial property or even a piece of land. Once you submit all the loan against property documents required, the lender sends an appraiser to evaluate the condition and value of the property. The mortgage loan process is quite simple. The loan amount to be disbursed is based on the value of the property. Generally, lenders offer up to 70% of the value of the mortgaged property as loan. This percentage is known as the Loan to Value. You may be eligible for a higher or lower Loan to Value depending on your eligibility as a borrower.

Who Is Eligible For Loan Against Property?

As a secured advance, loan against property eligibility criteria is quite relaxed. Both salaried and self-employed individuals can avail this type of loan. The eligibility criteria for salaried individuals are as follows:

• Age between 33 and 58 years
• Resident of India
• Employed in the formal sector

For self-employed individuals, the eligibility criteria are as follows:

• Age between 25 and 70 years
• Resident of India
• Must have a stable source of income

One has to submit documents supporting these eligibility criteria to avail a Loan Against Property. Loan against property documents required include:

• KYC documents
• PAN card
• Bank statements
• ITR
• Copy of the property papers to be mortgaged
• Salary slips (only for salaried individuals)

Features Of A Loan Against Property

Loan against property is considered one of the most preferred types of advances in India. There are several benefits of such loans.

First and foremost, the interest rates are quite low compared to unsecured loans, which automatically make it a more attractive proposition. Also, unlike gold loans, where you have to deposit your ornaments to the lender, you can continue using your property even during the loan term. A mortgage is only a transfer of interest and not of ownership from the borrower to the lender.

These loans are also marginally easier to avail. The eligibility criteria are quite simpler and you can avail it even with a comparatively lower credit score as the lender has your property as a security against defaults.

There are several other features of loans against property which make it a preferred choice for countless borrowers in India.

• High Loan Amounts

Loan against property is one of the highest value loans that you can avail in India. The lender decides the actual loan amount you are eligible for after evaluating the value of your mortgaged property.

For example, Bajaj Finserv offers Loans Against Properties of up to Rs. 1 Crore to salaried individuals, whereas a self-employed person can avail a loan amount of up to Rs. 3.5 Crore.

• Long Tenures

Most financial organisations offer tenure ranging between 15 to 20 years. Such extended tenure will leave you with affordable EMIs the entire loan amount and the interest is distributed into multiple instalments, e.g. – 240 instalments for a 20 year tenor.

You may calculate your EMI for different tenure with the help of an online loan against property calculator and choose an appropriate loan amount and tenor. Refer to lenders who provide Loan against property EMI calculators and similar borrower-friendly features such as Bajaj Finserv.

Bajaj Finserv also brings you pre-approved offers that make availing loans quick and easy. Pre-approved offers are available on numerous financial products including secured credits like home loans, unsecured credits like business loans and personal loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.

• No End-use Restrictions

Loans against properties come with no end-usage restrictions, which means that you can utilise the loan amount for any purpose you like such as funding higher education, meeting wedding expenses, medical emergencies, a residential or commercial property purchase, etc. You can even utilise the loan amount for debt consolidation to manage your finances better.

Loan against property is one of the easiest and most secure ways to gain external financial assistance in India. Choose your lender wisely and avail the numerous benefits of a loan against property.

Every penny counts if you are a business owner, so if you do not know the financial aspect of your business every month, there is a big chance that your business will be out at year’s end. And while you are using a Do-It-Yourself software to do your accounting tasks, and help monitor the costs, the advantages of hiring an NYC accounting firm to extend far beyond counting numbers.

Potentially, these firms can be your business’ financial partner in the long run, with not only knowledge of how you can finance your next company vehicle, for example, but also the way you can finance your kid’s college education. Before you decide on the firm you will hire, you need to make sure that you understand the essential areas of expertise in general accounting practices.

Business advisory services

Because accountants need to be knowledgeable when it comes to your tax situation, business environment, as well as your financial statements, it makes a lot of sense to ask the firm to pull the pieces back together and help the company come up with an excellent personal financial and business plan.

Firms can offer a lot of advice, from insurance, to expand your business (how will an additional capacity to affect your operating costs?). Accounting companies can bring in a new level of awareness, only under the firm’s perspective.

Recordkeeping and accounting

These are usually the most basic of all accounting disciplines. While it makes a lot of sense for owners to manage their everyday financial records, firms can help you set up accounting systems and bookkeeping, and show you how to use these helpful tools.

A good accounting system will allow you to evaluate your business’ profitability as well as modify the prices. It will also let the owners monitor their expenses, spot all the trends happening around the market, track company budget and minimize accounting fees that are required to produce tax returns and financial statements.

To find out more about recordkeeping, you can visit https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping for more information.

Tax advice

Accounting firms that provide help with issues that are related to taxes usually can do in two areas: tax planning and tax compliance. Planning refers to minimizing the company’s tax burden. Observance or compliance refers to obedience to tax laws.

Auditing

This type of service is usually required by a lot of banks as one of the conditions when a business owner asks for a loan. There are levels when it comes to auditing. From merely preparing the company’s financial statements to actual auditing, where the firm or other third-party company provides assurance, the business’ financial data is accurate.

Finding and choosing the right accounting firm

The most logical way to find a firm that suits you best is to get a referral from lawyers, bankers or business colleagues. You can also check out the Society of CPAs in your area, which can also make a good referral. While these professionals usually work for big companies, CPA work for all types of businesses, startups, small or big businesses.

Do not underestimate the importance of CPAs. The title is only given to people who passed a rigorous two-day, national standardized examination. A lot of states in the country require CPA candidates to have at least a college degree. Some states also require candidates to have post-graduate jobs.

Click here to know more about certified public accountant.

Once you find the best possible candidates, it is imperative to know how much of the accounting work your business will do, as well as, how much will the firm do. Services can be categorized into three: recording all the transactions, assembling the transactions and generating financial statements and returns.

Although recording and assembling transactions only require lower skill levels compared to making profits and financial statements, a lot of firms will charge clients the same hourly rate for all the categories. That is why it is imperative to know exactly what kind of work you want the firm to handle.

The next thing you need to do is to interview the applicants. For every applicant, plan at least two meetings before you make your decision. One session needs to be at your office. The other meeting needs to be at their site. During these interviews, your goal is to find out the services they are offering, the culture and personality of the firm and how much they are asking for their services.

Aadhaar is a 12-digit unique identification number that is issued to you by the Central Government, and your Aadhaar card stores and verifies your identity in government records. Apart from basic information, it also contains your biometric and demographic information. The Aadhaar card importance lies in the fact that it is biometrically linked to you. This information rests in the government’s database and can be used by authorities to verify details easily. Since the information is stored digitally, it bypasses the need for physical checks and adds efficiency and speed to most procedures.

While the Aadhaar card is a government-linked identification document, it has other uses too. Take a look at the other instances where having an Aadhaar card is beneficial.

Applying for PAN card

Your PAN card is essential to your profile as it keeps track of all financial transactions that have a taxable component. When applying for a PAN card, it is mandatory that you have your Aadhaar card. Furthermore, existing PAN cards that are not linked to your Aadhaar card will soon be deactivated. This has adverse effects when it comes to tax payments as individuals without PAN pay a higher amount.

Opening a bank account

Your Aadhaar card helps you open a bank account too as it provides all the e-KYC information required. It also assists the bank with quick verification your information owing to the biometrics on your Aadhaar card. Prevention of banking fraud is easier for financial institutions as well.

Accessing government schemes

Government schemes are a great way to get a step closer to any goal, whether it’s buying a house or starting a business. However, to avail most, you’re required to have an Aadhaar card. For example, Aadhaar is mandatory for students who wish to apply for central scholarships at the college level. Similarly, it is also mandatory if you want to benefit from the Credit Linked Subsidy Scheme under the Pradhan Mantri Awas Yojana that aims to creating housing for all.

Filing of income tax returns

As per a Supreme Court ruling, it is mandatory to link your Aadhaar with PAN card before you are filing income tax returns. This is because there is a mandatory field on the online ITR form that requires you to enter your Aadhaar details and Aadhaar enrolment number.

Aadhaar card benefits are not limited to these 4 instances. This document is a necessity when applying for all kinds of financial assistance too, as it helps ascertain authenticity. Providing such a document also speeds up the application process as it stores several pieces of information.

For example, when you apply for a Personal Loan, you are required to submit a few documents such as KYC documents and income proof. By submitting the right documents in one go, you can benefit from instant approval. Here, the Aadhaar card is extremely handy as you can use it to take care of all KYC formalities. As financial institutions are now able to process your documents and application faster, they extend this benefit to you in the form of quicker disbursal.

When searching for an affordable health insurance plan, you must take into consideration the total cost of the insurance scheme, along with the add-ons, facilities, and the offered benefits. What could be affordable for you, may not be so for someone else and vice-versa. Thus, we have put together a list of factors to keep in mind and compare, when selecting a perfect and pocket-friendly health insurance policy.

1. Compare Premium Amount

Not only should you compare the insurance schemes, but premiums as well. There are several online aggregators, which can help compare insurance policies in terms of premiums, features, maximum returns, benefits, and other conditions.

2. Minimum Waiting Period

A waiting period is a tenure that you have to wait till you can make a claim for a treatment against a disease, condition, etc. In most cases, the waiting period is between 2 and 4 years. If you have a pre-existing disease, then opt for a medical insurance policy that provides the lowest waiting period.

3. Maximum Coverage Amount

Choose a plan that provides maximum coverage for health and medical treatment. As healthcare costs are surging drastically, you will want a complete protection even at times of inflation. Thus, look for a high coverage amount.

4. Family Floater Health Plan

A family floater plan covers healthcare costs for an entire family. So, instead of buying individual policies for each member, you can take a family insurance plan and save big on premiums. An advantage of such a policy is that any of the insured people can utilize the amount provided for a medical treatment.

5. Plans with High Sub-limits

Most of the health insurance plans have sub limits on per day for room rent and medical expenses during hospitalization. You should look for a plan that offers the highest slab on healthcare expenses and room rents.

6. Check Out the Network Hospital

Consider taking a plan that has a wide network of hospitals in your residential area. There will be a certain network of hospitals from which you can avail the treatments, as underwritten in the policy. You can even avail additional benefits at said hospitals. These benefits include 24-hrs ambulance support, cashless transaction, pick and drop services, etc. Thus, there is no point in buying a plan if the associated network of hospitals are less or none in your area of residence.

7. Check the Sum Insured

The right sum insured must be based on your age, lifestyle, and marital status. At a young age, you are at a lower health risk. But as you become older and beyond 40 years, you could be prone to several lifestyle diseases such as hypertension, diabetes, joint disorders, etc. Similarly, after your marriage, you should consider the health status of your spouse as well.

8. High Claim-Settlement Ratio

Always select a health plan and an insurance provider that has a high claim settlement ratio. If the number of claims settled by an insurer on total claims it receives is high, then the claim settlement ratio is said to be high, and vice-versa. Make sure to attach all the required proofs and documents at the time of filing a claim to ensure higher approval chances.

By paying attention to the above-mentioned factors of health insurance policies, you can definitely get the right one for yourself.

Everybody likes to bring down their tax liabilities. And everybody wants their corpus to grow. So, if there is an investment instrument that provides both these perks, it is bound to climb the popularity charts.

Equity linked Saving Schemes or ELSS is the name given to these instruments. These tax-saving mutual funds can help in bringing down the income tax liabilities by Rs 1.5 Lakhs (as per the Section 80C provision)

While there are numerous tax saving options available in the market, ELSS has the potential for solid returns along with the shortest lock-in timeframe.

Salient features of the Best ELSS Mutual Funds:

• These funds invest a large portion of the portfolio in equities.
• They have a mandatory three-year lock-in period.
• These funds offer the twin benefits of tax savings along with wealth appreciation in the long-term (through equity investments).
• Flexibility to invest via the SIP (Systematic Investment Option) mode.
• Investors have the choice to go with dividend option if they want to get regular income. Alternatively, they can opt for growth option to benefit from long-term capital appreciation.
• Unlike other Mutual Funds, they do not levy any exit load.

Why should you invest in ELSS mutual funds?

• Tax Benefit

The factor that attracts most investors to the best ELSS mutual funds is the qualification for tax deduction (up to Rs 1.5 Lakhs in a financial year). Additionally, the returns from ELSS are exempt from tax (till the value of Rs 1 lakh). For income in excess of Rs. 1 Lakh, tax is levied at 10% (Long-Term Capital Gains).

• Step into the equity ecosystem

ELSS Funds are a great way to get initiated into the world of equity investments. As they have a compulsory three-year lock-in period, it gives investors (especially beginners) sufficient time to get used to the fluctuations and volatility witnessed in the stock market.

• Shortest lock-in time frame

If we look at other investment options that qualify for tax deduction under Section 80C, ELSS has the shortest lock-in period of three years.

For instance, PPF (Public Provident Fund) has a 15-year lock-in period while NSC (National Saving Certificates) have a five-year lock-in period. Even from the perspective of returns, ELSS has the potential to generate better returns as compared to these investment avenues.

Points to keep in mind while investing in ELSS Mutual Funds

• Risk Appetite

Many investors get attracted towards ELSS Funds as they have the potential to generate good returns. However, one should not forget that ELSS Mutual Funds invest primarily in stocks and equities. Even the best ELSS mutual funds require a good amount of risk appetite and as a result, they tend to be prone to market fluctuations and volatility, especially in the short run. Hence, before investing in ELSS one should ensure that they are ready to bear the risks associated with these funds.

• Lock-in Period

ELSS Funds have only a three-year lock-in period, which is one of the shortest amongst all other tax saving alternatives. However, one should not rush to exit from these schemes at the completion of the mandatory holding period. One should remember that equity investments bear the sweetest fruits in the long run. It is a wise decision to remain invested for at least five to seven years to optimize the returns.

How much should you invest in ELSS mutual funds

Now comes the most important question. How much investment is good enough? And how much is too much?

The answer to this question lies in a combination of factors:

• If the purpose of investment is solely tax savings

Many individuals choose to invest in ELSS Funds with the objective of saving taxes. Any appreciation in capital is just an added benefit for them. If you fall in this category, then you should remember that Section 80C of the Income Tax Act allows deduction only up to Rs 1.5 Lakhs. So, any additional investment (in excess of Rs. 1.5 Lakhs in ELSS) is not going to be helpful.

One should also take into account other contributions such as towards life insurance policies, provident fund (employee, voluntary and public), pension plans, saving certificates, etc. These also fall under the ambit of Sec 80C. If you are already making contributions towards any of these, then invest only the balance amount in ELSS.

• If one is looking for capital appreciation

Investors who choose ELSS for the primary objective of capital appreciation (or dual benefits of tax savings), are not restrained by the 1.5 Lakh limit. However, they need to keep these things in mind while increasing their investment in ELSS:

• Size of the portfolio

In case of large portfolio (for instance Rs 30 Lakhs annual incremental investment), 1.5 Lakhs contribution towards ELSS amounts to only 5%. One can go for an increased ELSS investment as well. However, one should take into account that in other mutual fund schemes, one is able to make a more well-informed decision on whether one wants large-cap, small cap or even multi-cap.

In case of a smaller portfolio (for instance Rs. 5 Lakhs annual incremental investment), 1.5 lakhs in ELSS amounts to 30% of the yearly investments. So, if 60-40 is the desired equity debt ratio, then an additional Rs 1.5 Lakhs can be parked in equity-based funds.

If the portfolio size is even smaller (for instance Rs 2 Lakhs annual contribution), then 1.5 lakhs in ELSS already amounts to 75% funds in equity. This is a highly skewed portfolio and may not be ideal even for risk aggressive investors.

• Age

Equity investments are just like sugary food items. We must bring down them down as we climb up the age ladder. So, if you are young, have just started your career or have no other financial liabilities, you can go for a higher contribution towards equity-based funds (including ELSS).

Best elss mutual funds by Orowealth

Final Words: Do not forget the importance of Goal-Based investing

Last but not the least, ELSS (or any other investment option) should be taken up after analyzing one’s financial goals, their time horizon and risk quotient. If these three aspects are in sync with the features of ELSS, then go ahead with it.

Also, if one wants to optimize their returns from ELSS, they should start investing it in from the beginning of the financial year. Do not let it be a residual choice which is exercised in the last month of the year.

Credit and Debit cards seem similar due to certain features. For instance, they both have a sixteen digit code, along with an expiry date printed on the front side and a 3 digit CVV code printed on the back of the card. But when it comes to their working mechanism, there is a lot of difference between the two cards.

When you purchase something from a debit card, the money gets debited instantly from the bank account with which the debit card is linked. But when you purchase something from a credit card, the amount is added to your credit card bill which you will need to pay at the end of the month. A debit card allows a customer to spend the money from the bank account electronically while credit card allows a person to purchase up to a certain limit.

The credit and debit cards have their unique set of advantages, and which is why it is always a wiser option to have both of them.

So many people struggle to understand what exactly is a credit card? Well, in simple words, a credit card works more like a loan provider which must be paid at a monthly billing cycle. When you purchase or pay anything using a credit card, the amount is provided to you by the credit card company as a loan which is added to your bill which is to be paid back. If you fail to pay the loaned amount in the allocated time, then you will be charged with a penalty along with the accumulation of interest and a negative credit score.

Which is better?

As per a survey of users who use both credit and debit card, a debit card is more useful as the debit card allows you to spend as per your financial capabilities. You can only spend the amount that is in your bank account but when it comes to paying using a credit card, most of the time, people cross their financial limits and fail to pay the bill at the end of the month which leads to accumulation of late fees, interest charges and the pressure levies upon them. Even though using a credit card is tempting as the money won’t be charged from your account instantly, and you can even shop or pay bills even if you don’t have any balance in your bank account, but the chances are high that you may fall in the trap of debt.

As far as security is concerned, many individuals imagine that it is more secure to utilize a Debit card than a Credit Card. They trust that a Debit card offers upgraded security in contrast to a Credit. The facts confirm that a credit card comes in extraordinarily helpful amid times of crisis, when we have to spend on state flight tickets or medical expenses yet don’t have that measure of money available to us that exact instant. There is a gigantic flipside to the equivalent being that the card accompanies the enticement of overspending and gets the customers into an endless loop of obligation.

Credit cards and debit cards have their unique features and benefits. While a debit card allows you to spend money while adhering to your limits. On the other hand, a credit card provides you with financial support during emergencies. There are a lot of facts about credit cards that most people don’t know. You can click to know more.

For decades, investors have been under dilemma in figuring out the right mode to invest in mutual funds – SIP or a Lump sum? Lump sum investment refers to a single payment mode. Risk appetite, investment objective, and tenure are taken into consideration for a lump sum investment in mutual funds. On the other hand, SIP or Systematic Investment Plan allows you to pay at fixed intervals of time. You can either opt for daily, weekly, quarterly, or monthly automated deductions under the SIP scheme.

Which one is better for investment – SIP or Lump Sum?

Let us take an example to understand this in a better way –

Returns during risking market:

Lump sum investment – 1200000 INR @ -0.73 CAGR for a period of one annum yields 1191999 INR.

SIP investment – (100000 x 12) INR @ 0.58 CAGR for a period of one annum yields 1203204 INR.

Advantages of preferring SIP investment over Lump Sum:

Compounding Power – With SIP, you can quickly increase your investment amount by a certain fixed amount. This enables you to receive compounding benefits which add on to your final returns on investment. This is what we technically refer to as compounding power. Mutual fund SIP calculator can help you figure out how your investment shall look like.

Stress is less with SIP – When you compare your SIP investment with your Lump sum, you will find the former one to be less stressful than the latter one. Besides, it keeps you motivated to invest more. Alternatively, in the case of Lump Sum, market volatility may force you to withdraw money under panicking situations. This is not the case with a diversified SIP investment as whatever you invest gets spread out without concentrating at one point.

There is no need to continuously monitor market – SIP eliminates the need to continually ponder around the market trends. Continuous market monitoring is essential for those who are entirely new to the market volatility and are confused about their entry time. In case you invest in a significant amount, you are likely to lose hold of a substantial fraction of your investment if the market crashes. With SIP, however, you do not need to worry about your investment, as only some fraction of it will be exposed to the market volatility.

Rupee-Cost Averaging – Investing through SIP mode will be utilizing fewer mutual funds unit when the market is up. When the market hits bottom, your SIP will use more mutual fund units to average your mutual fund investment. This helps in eliminating all the associated risks so you can confidently step in with your SIP investment.

Encourages you to invest – With a mutual fund SIP calculator at your fingertips, you have complete independence to invest a manageable fund under any mutual fund scheme (tax-saving). This helps you to organize all your investments efficiently and encourages you to save more.

These are some of the benefits why you should prefer to invest in mutual funds through SIP rather than Lump Sum investment mode. Click here to know more about Systemic Investment Plan benefits.

In modern days, personal loans can be lifesavers for those who find themselves in a financial crisis. Also, with personal loans, you can finally buy the things that you’ve been eyeing for months. But before applying for personal loans, you must be aware of your financial status. EMI is the amount of money that has to be paid every month by the personal loan borrower. It is necessary to keep track of the money you are spending so that you don’t face another financial crisis.

Ways to Calculate your Personal Loan

You can easily calculate your loan expenses through personal loan EMI calculator. We all know that financial institutions use a specific mathematical formula to calculate interest rates. It is tedious to calculate with the formula and you can make mistakes. You don’t have to worry because the personal loan EMI calculator makes your job easier by showing the results within seconds. You just have to enter the interest rate, amount of loan sanctioned and the duration of time through which it is to be paid.

The calculator is available online on various websites. You simply have to insert all your details of personal loan so they can calculate your monthly interest rate. Checking out the amount before applying for your loan helps you manage your expenses and understand how much you need to spend. Personal loan EMI calculator applies the formula E= P*r* (1+r)^n /((1+r)^n-1), where E is the EMI, P is the principal loan amount, r is the interest rate that is calculated monthly and n is the duration of the personal loan. If you’re still in confusion, know more here.

How to keep a record of your personal loans

Constantly check your documents: Always keep a track of your personal loan documents. Check them from time to time for pending payments. Call the authorities if there is some mismatch in the documents stating the details on the personal loan.

Check the EMI calculator regularly: Keep checking the monthly interest rates regularly through personal loan EMI calculator. Knowing how much to spend for the month can help manage your finances better. It is also a reminder that you have payments to make for this month.

Keep your documents in order: If you have applied for more than one personal loans, keep your documents in order. Keep them in separate folders so you can quickly check them whenever you require. It will also help you keep track of all the payments you have to make.

Keep checking your loan status: If you’re someone who is awaiting your approval of the personal loan, then you need to be awareof its status. There are many ways to check your status. Nowadays loan providers can provide your personal loan details in exchange for your number or document ID. It can be checked online. You can also go to the institution where you applied for your loan and ask them directly.

For most of us, a home loan is a means to fulfil our dream of owning a home. But a home loan is quite an expensive affair and binds us for 10–15 years. In this prolonged time span, a borrower can save a good amount to reduce the burden of the loan. If you have enough savings and want to pay off your debt as early as possible, you need to go the prepayment way. But you should also keep in mind that lenders charge a certain fee as prepayment penalty. If you are a borrower, you should read on to know what a prepayment is and what pros and cons it has.

What is a Home Loan Prepayment?

Prepaying means paying above the fixed EMI amount of an outstanding loan amount. A prepayment can be for the whole due amount of a loan. Also, a partial settlement of debt can be made before the due date, like 3 or 4 EMIs at a time.

Let’s consider an example to clear the picture. You pay an EMI of Rs.15,000 for a home loan of Rs.20 lakh, with a tenor of 15 years. Now, you have saved a handsome amount or got a good bonus. You may prepay some of the loan amount with the extra amount in hand. For that, you can utilize the online home loan prepayment calculator to get a fair idea. This will reduce the burden of the loan.

Things to Consider before Prepaying your Home Loan

• Check your current financial scenario. Do you have enough money to make a prepayment?
• Calculate how much money you need at present or in the near future before going for the prepayment.
• Have a look at the current home loan rates if your loan has a floating interest rate. Will they rise, fall, or remain the same? Will it become beneficial if you prepay? Ask yourself these questions first.
• Check if there is an alternative investment option that will give you a better return.
• If you have multiple loans, begin by prepaying the one with the highest rate of interest.

Should I Go for Reducing EMI or a Prepayment?

Here’s another example to consider. You have got a bonus of Rs.2 lakh and plan to make a prepayment of home loan with the amount. Now, if the tenor remains unchanged, the home loan EMI amount will decrease. On the contrary, the EMI will remain the same if the tenor is reduced. So, when it comes to prepaying your home loan, think about what the better approach would be—reducing the EMI or the tenor.

But if you choose to prepay, you will be able to save on interest expenditure and to reduce the outstanding principal amount. This will also have a positive impact on your credit history.

Disadvantages of Home Loan Prepayment

• There is no tax benefit if you prepay your housing loan. But with your regular EMIs, you get tax savings.
• By prepaying your house loan, you let go of a substantial amount. You could have invested this amount elsewhere.

Documents Needed

You need to furnish some documents to prepay the loan. These include everything you provided while applying for the loan. A government ID proof is mandatory. Keep a bank statement handy that reflects your EMI payment history.

Conclusion

A home loan prepayment has both advantages and disadvantages. Therefore, consider all the points before you decide to prepay your home loan. Nowadays, non-banking financial companies (NBFCs) offer a home loan amount up to Rs.5 crore with a tenor up to 20 years. So, owning an apartment in your dream complex is no big deal now. Just check your eligibility and the home loan rates.

There is no longer a serious organization that does not want ‘something’ with bitcoin, or rather: with the blockchain, the ‘technology behind bitcoin’. Even DNB announced in its annual report last week a project with a DNBcoin , “based on blockchain technology”.

Sorry, DNB, but this makes no sense at all.

What is a bitcoin? and what is its purpose?

What is a bitcoin? Bitcoin is a digital currency. The purpose of bitcoin (the design assignment, the problem to be solved, the raison d’être) is to be able to make reliable digital payments in the absence of a central authority trusted by all parties. The raison d’être of DNB (or at least part of it) is precisely to be that central authority in Dutch payment transactions.

The problem to be solved with digital coins is double spending. You can make perfect copies of everything that is digital quickly and cheaply. There are two solutions to this problem. By far the simplest is a central authority. Simply put: when I make a payment, it is checked in a central register – at DNB, for example. If I have previously issued the coin, the transaction will be refused. If not, the currency changes ownership and the register is updated.

The second solution (the only real existing other solution) is the blockchain as bitcoin uses it. The blockchain is a public register. Anyone can write in it, but transactions cannot be changed afterwards. The register exists in thousands of copies, and an ingenious mechanism ensures that there is always consensus about the state of the register.

Components of this mechanism are principles from cryptography and probability calculation, but also the economy. Thousands of miners are busy solving a crytographic puzzle, and the one who succeeds first is rewarded with a pile of bitcoins. Anyone who wants to falsify the register will have to beat all those thousands of miners and that is statistically impossible (or at least so costly that it makes the entire exercise meaningless).

The second method, the bitcoin blockchain, is accompanied by a lot of waste. All miners, except one, are always working for nothing. So if there is a central authority, the blockchain is always an inferior solution. A central bank that works with a blockchain is like trying to make tofu from steaks.

(Or it may be that DNB is thinking of a blockchain in which everyone can read, but DNB is the only one allowed to write, and which is not updated by miners but by a large computer on Frederiksplein. In that case, blockchain is simply a hip word for database .)