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Commentary

LinkFest #7: Inflation, Home Loans and Loads

Read Home Loan agreements before signing (Rediff)
The three authors of this fantastic article tell you important gotchas about Home Loans – the fine print of the agreement is pitched against you. Be it reset clauses on fixed rate loans, ambiguous and aggressive definition of “defaulters” or simply by removing your negotiating power with the builder by directly giving them money, home loan documentation is set up to work against you. Obviously, coming from the financer, this is expected, but you can object and get certain clauses altered or in some cases, removed.

Will you sign a document, quoted as from Citibank, which has: “The bank shall at its sole discretion alter the terms of this agreement by written intimation sent to the borrower by courier. Any amendment proposed by the borrower shall be valid only if made by a written agreement signed by both the parties.”. No changes by sole discretion to ANY agreement can be allowed – that’s equivalent to signing a blank cheque.

Inflation surges to 6.12% (Economic Times)
Inflation this week has moved up to 6.12%. This is very high and will be of serious concern in the Finance Ministry and the RBI. Now you can surely expect a rate hike in the next RBI meeting on Jan 31 – this may adversely affect banks, real estate development companies and companies where debt is very high.

Load Factor (Value Research Online)
Never understood what an Entry Load or Exit Load is? Look here for a fairly comprehensive understanding of loads. What the author missed here was information about what funds are truly no-load, the Vanguard kind that revolutionised the mutual fund industry in the US. Answer: None. Nearly every single fund we know has a load, either on entry or exit.

Earlier Linkfests: 1, 2, 3, 4, 5, 6

  • Anonymous says:

    >Hi,

    I have been reading your blog from last week.. and almost finished 75% of your previous blogs to get all the needed info.
    It is quite interesting and the writing is great!! Hats off!

    Continue your good work.

    I have seen you recommending ELSS.
    I read most of the other blogs in your link too and found them useful too.

    I want to know which ELSS is good to invest and I am going to start investing only by next month, hopefully.

    I want to invest in one of the ICICI plans and I saw PruICICI Tax plan to be useful as a ELSS.

    Give your suggestions.

    -Manickkam.

  • Nagendra says:

    >Hi Deepak,
    would like to know your opinion on FMP(Fixed Maturity Plans)and what would your recommendation be, regarding any currently open FMPs

    Regards,
    Nagendra.