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.