Saving Money For Home: Get 8.60% Interest Rate On Bajaj Finance FD

Your home is the most expensive asset creating activity as compared to any other financial goal. Wanting the best possible options in investment and highest returns is the key to paying off a home loan easily without too many hassles. Here are a few ideas which can help you generate a good corpus for your home loan.

Chances are you going to make a down-payment as much as possible and book your potential home on a loan with a bank. This is easily a 20-year commitment if you go as per the entire duration. However, the interest component in a home loan is very high. You can easily end up paying almost half the principal amount as interest. Take a moment to plan your finances, a few years before you start to think of taking out a home loan.

You can do this in the following ways -

• Minimize your home loan principal – A Corporate Fixed Deposit is the safest and most highly rewarding option of investment that you can use to build a corpus for a down payment. Bajaj Finance offers a minimum of 8.6% on a 5 year FD for a new customer. This way, you can ensure to use the highest deposit to earn the best returns. Going for equity investment for this will increase the risk of losing your capital, and a Bajaj Finance FD can easily provide a large corpus.

• Use the cumulative option – In a company FD, with such high returns, it is avoidable to ensure that your interest is compounded and not paid out which will hamper the overall returns. In a non-cumulative option, a periodic pay-out, as decided by you, is done (monthly, quarterly, half-yearly). The cumulative option will help you build a large corpus which can be used as part of your down payment.

• Supplementing your EMI with a high interest – If you have created an FD with Bajaj Finance but need to go for a home loan immediately, do not worry. You can redirect the high interest from Bajaj Finance FD by going for non-cumulative option and paying off your EMI. With 8.6% interest which can yield you 51% returns, you can easily take care of your home loan.

• Look at highest ROI – Return on Investment (ROI) in a Bajaj Finance FD is a minimum of 51%.

Investor

Interest rates

Amount

Tenor

Return

ROI

New customer

8.6%

• 5 lakhs

5 years

• 2,55,299

51%

Senior citizens

8.95%

• 5 lakhs

5 years

• 2,67,549

54%

Bajaj Employee

8.85%

• 5 lakhs

5 years

• 2,64,033

53%

This is one of the best returns in any investment type that you can receive and it is best to take maximum advantage by investing in the highest amount possible. Even equity instruments with their high volatility will provide you this return over a period of 10 years or more and if the economic cycles have been too volatile then you would probably still not earn these returns.

• Ladder your investments – A home loan liability can be reduced by making part-payments at certain intervals during the home loan tenor. Let's say every 3 years you decide to pay off an additional amount of minimum Rs. 1 lakh or more. This will be beneficial in the initial 5 years the most as it will reduce your interest component by a high margin. For planning easy part-payments, you can again create a series of FDs with Bajaj Finance with different maturities to receive FD amounts in every 3 years or so with high ROI. This way each FD is like a corpus you can multiply and use to prepay your loan easily.

• Augment your home loan with a high paying FD – If you find the home loan rates very high, you can take a loan up to 75% of the value of your Bajaj Finance FD to pay partly for your home. This way you are still earning interest on the principal while you can use it as a part-payment.

These simple ideas can reduce your home loan liability significantly.

Aman Khanna is an experienced financial advisor. He has written numerous pieces on various investment topics like Mutual Funds, FD, RD and many more.