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HT Estates - - Front Page - Harsh Roongta

I am in­ter­ested in tak­ing a home worth R32 lakh to buy a house, but right now I am not able to pay full EMI so I am in­ter­ested in preEMI op­tion. I have heard that in pre-EMI op­tion amount paid per month is less than EMI. So I wanted to know how much amount I need to pay in pre- EMI op­tion?

—Mi­nal Saha EMI is a sim­ple in­ter­est payable on a loan taken for an un­der-con­struc­tion prop­erty and the ac­tual EMI starts upon com­plete dis- burse­ment of the en­tire loan amount. In case of a readyto-move-in re­sale or new prop­erty, a reg­u­lar EMI will be payable im­me­di­ately and you do not have the op­tion of pre-EMI and thus pay only the in­ter­est. Some of the banks have prod­ucts where the EMI is lower in ini­tial years and goes up grad­u­ally to keep pace with in­crease in your in­come. These are pop­u­larly known as step-up home loans. Can I get a home loan on a 16year- old prop­erty? What per­cent­age of loan amount would be ap­pli­ca­ble?

—Om Ma­lik If your in­come is suf­fi­cient to jus­tify the loan, you should not have any prob­lem in get­ting a loan, pro­vided the phys­i­cal con­di­tion of the house is good and the val­uer ap­pointed by the bank cer­ti­fies the value as well as bal­ance life be­ing more than the loan ten­ure. Nor­mally the val­u­a­tion done by the val­uer of the bank is lower than the value agreed to by the par­ties and hence your ef­fec­tive down pay­ment goes up. But if the above­men­tioned con­di­tions are sat­is­fied, then you should be able to get the loan on the reg­u­lar terms.

Lenders usu­ally grant home loan up to a max­i­mum of 80% (90% for loan amount be­low R20 lakh) of the agree­ment value of the prop­erty as a home loan. I will be tak­ing a home loan from a fi­nan­cial in­sti­tu­tion for 20 years. How­ever, in the sanc­tion let­ter it is men­tioned that I will have to take in­sur­ance cov­er­age for the loan amount from an in­sur­ance provider they have a tie-up with. Is this le­gal?

—M Malhotra Most banks only pro­vide in­sur­ance fa­cil­ity as an ad­don (for which the bor­rower needs to pay ex­tra). And if the bor­rower has not cho­sen the fa­cil­ity then there is no in­sur­ance cover. Buy­ing of such in­sur­ance from the in­sur­ance com­pany, which has a tie-up with the lender, is not com­pul­sory. How­ever the lenders in­sist on an in­sur­ance cover, which is not le­gal. If the bank in­sists on in­sur­ance you can al­ways buy in­sur­ance from any other in­sur­ance com­pany and as­sign the same to the lender. How­ever, it is in your in­ter­est that you take a term in­sur­ance plan and a crit­i­cal ill­ness plan so as to cover the amount out­stand­ing on your home loan so it co-ter­mi­nates with the ten­ure of your loan. This will en­sure that your de­pen­dents are not bur­dened with the home loan should you die or suf­fer from an ail­ment.You will need to as­sign the pol­icy to the lender. If your lender does not agree, there are plenty of other lenders in the mar­ket who ac­cept an in­sur­ance pol­icy from an­other in­sur­ance com­pany. How do I cal­cu­late nom­i­nal rent?

—Ra­jat Roy The no­tional rent is the value at which the prop­erty is expected to be let out. You should look at rental rates of sim­i­lar prop­er­ties in the area to de­ter­min­ing the nom­i­nal rent value.

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