I have an education loan and a two wheeler loan and my income is R20,000 per month. How much home loan can I get?
—Rakesh Tiwari Different banks presume that a certain portion of your income is available for payment of EMIs of loans. It varies from bank to bank and there is no standard norm/formula. Normally, however, the bank will assume that around 40%- 45% of your net salary is available for payment of EMI to serve all the loans. Hence, your existing loans will have an impact on your loan eligibility and the lender will calculate the eligibility based on the EMI being paid now and the room left to pay the EMI for the home loan. For example, if the existing EMIs on your educational and two wheeler loans are R6000 pm then the bank will I need to buy land worth R15 lakh and build a house immediately. The construction amount will be around R10 lakh. Can I get loan for both plot and construction and can I get tax exemptions?
—Sailesh Julka You can take a composite loan, which is a loan taken for self-construction of a house. The loan is given to finance the cost of land as well as cost of construction of property on the plot. The bank will require documents such as proof of income, identity, residence for the home loans and documents relating to title of the property being purchased. You will have to submit an estimate of the total cost of construction, certified by an architect/civil engineer. The amount you paid for the plot or the current market value, whichever is lower, will be taken into account to work out the total cost of the project provided you commence the construction within a reasonable time after purchase of the plot. The bank will determine the home loan amount based on the total cost comprising construction cost and cost of the plot. The loan will be released in parts, based on the progress of the construction, and after you have brought in your full contribution. The bank may insist on sending its own technical personnel to assess the progress of construction or may rely on certificates/photographs submitted by you. Some banks are not comfortable funding self-constructed properties. I had taken a home loan from StandardChartered Bank in 2004. I am told now that prepayment charges on the outstanding loan amount are applicable. Do Ihave to pay for foreclosure?
NHB (that regulates
Mithilesh housing finance companies such as HDFC Ltd, LIC Housing Finance, etc) had issued a circular on doing away with pre-closure charges if paid from own source. There are currently no RBI regulations / instructions in this regard. Therefore, banks are free to charge the prepayment charges. A lot of banks, though, do not charge prepayment charges from own sources. You need to check your loan agreement copy to ascertain whether the foreclosure being charged is as per the agreement.