How to deduct provident fund from portfolio loan
As the real estate market continues to heat up, portfolio loans have become the choice of more and more home buyers. A combination loan refers to a method of using both a provident fund loan and a commercial loan to purchase a property. So, how is the provident fund portion of the portfolio loan deducted? This article will explain it to you in detail.
1. Basic concepts of portfolio loans
A combination loan means that when a home buyer applies for a loan, he or she uses a provident fund loan and a commercial loan at the same time to meet the financing needs of the home purchase. Provident fund loans are partially issued by the Housing Provident Fund Management Center, with relatively low interest rates; commercial loans are partially issued by commercial banks, with relatively high interest rates. The advantage of portfolio loans is that you can make full use of the low interest rates of provident fund loans and at the same time make up for the shortfall in provident fund loan quotas through commercial loans.
2. Provident Fund Deduction Process
In a portfolio loan, the deduction of the provident fund portion is mainly divided into the following steps:
1.Apply for provident fund loan: Home buyers first need to submit a loan application to the Housing Provident Fund Management Center and provide relevant materials, such as ID card, home purchase contract, income certificate, etc.
2.Review and disburse: After approval by the Housing Provident Fund Management Center, the loan amount will be directly transferred to the account of the developer or seller.
3.Repayment method: The repayment method of provident fund loans is usually equal amounts of principal and interest or equal amounts of principal, and the monthly repayment amount is fixed or decreasing.
4.Provident Fund Deduction: During monthly repayment, the provident fund portion will be deducted from the home buyer’s provident fund account first, and the shortfall will be deducted from the designated bank account.
3. Specific rules for provident fund deductions
The following are the specific rules for provident fund deductions in portfolio loans, presented in table form:
| Project | rules |
|---|---|
| Deduction order | Priority will be deducted from the provident fund account, and the shortfall will be deducted from the bank account. |
| Deduction time | A fixed date each month, usually the repayment date |
| Deduction amount | Determined according to the repayment schedule, including principal and interest |
| Insufficient provident fund balance | If the provident fund account balance is insufficient, you need to ensure that your bank account has sufficient funds. |
4. Things to note when deducting provident fund from portfolio loans
1.Provident fund account balance: Home buyers need to ensure that there is sufficient balance in the provident fund account for monthly repayment, otherwise the repayment may fail.
2.repayment plan: Home buyers should understand the repayment plan in detail, clarify the monthly repayment amount and the order of deductions, to avoid overdue due to negligence.
3.Interest rate changes: Provident fund loan interest rates are relatively stable, but commercial loan interest rates may change with the market. Home buyers need to pay attention to the impact of interest rate changes on the repayment amount.
4.Early repayment: Some provident fund management centers and commercial banks allow early repayment, but may charge certain handling fees. Home buyers need to understand the relevant policies in advance.
5. Advantages and Disadvantages of Portfolio Loans
As a flexible loan method, portfolio loans have both advantages and disadvantages:
| Advantages | Disadvantages |
|---|---|
| Lower interest rate (provident fund portion) | The application process is complicated and requires meeting both provident fund and commercial loan conditions. |
| Loan amount is higher | The repayment methods may be different and management is more cumbersome. |
| Flexibility to meet home purchase needs | Commercial loan interest rates are higher and overall interest payments may increase |
6. Summary
Provident fund deduction in portfolio loans is a relatively complex but important link. Home buyers need to fully understand the deduction rules, repayment plans and related precautions of provident fund loans to ensure smooth repayment of the loan. At the same time, home buyers also need to weigh the advantages and disadvantages of portfolio loans based on their own circumstances and choose the most suitable loan method.
Through the analysis of this article, I hope it can help you better understand the deduction method of provident fund in portfolio loans and provide a reference for your home purchase plan.
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