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I am a gov­ern­ment em­ployee draw­ing a net salary R20,000 per month. What’s the max­i­mum loan amount I am el­i­gi­ble for and what are the tax ben­e­fits I’ll get?

—Ra­jan Mal­ho­tra As­sum­ing you are not ser­vic­ing any ex­ist­ing loan cur­rently and have had a good re­pay­ment track record in the past (if any), you will be el­i­gi­ble for about R9 lakh at an in­ter­est rate of 10% per an­num for a loan ten­ure of 20 years. This is as­sum­ing you are younger than 40 years and that the agree­ment value of the prop­erty is at least R10 lakh.

You can get tax de­duc­tion for re­pay­ment of the prin­ci­pal amount of loan un­der sec­tion 80C of up to a max­i­mum limit of R1 lakh. More­over, you can also claim de­duc­tion for in­ter­est on loan to the ex­tent of R1.5 lakh if the prop­erty is self­oc­cu­pied un­der Sec­tion 24. Please note that the full in­ter­est can be claimed if the prop­erty is let out. How­ever, the over­all de­duc­tion un­der Sec­tion 80C can only be claimed up to R1 lakh in ag­gre­gate with other items of in­vest­ments ir­re­spec­tive of the num­ber of home loans. If I be­come a guar­an­tor for a friend’s home loan ( R16 lakh- R18 lakh), would it af­fect my home loan eligibility as I, too, plan to ap­ply for a home loan ( R20 lakh) in the near fu­ture?

—R Ka­mal Be­com­ing a loan guar­an­tor is for all prac­ti­cal pur­poses bor­row­ing the money your­self and thus will af­fect your loan eligibility di­rectly. So your eligibility will be calcu- lated af­ter tak­ing this loan (the guar­an­teed one) as al­ready out­stand­ing.

Be­sides, if your friend de­faults on pay­ment of his/her EMI re­peat­edly, the lender can al­ways ini­ti­ate pro­ceed­ings to re­cover the out­stand­ing loan amount from you and your credit re­port will also be af­fected ad­versely for what your friend did. How should I choose the ten­ure of a float­ing rate home loan?

—Mita Ra­jput If loan eligibility is a con­straint, go for the long­est pos­si­ble ten­ure. Some banks al­low 25 to 30 years though most banks al­low only up to 20 years. The max­i­mum ten­ure is also re­stricted by your age at the end of the ten­ure so as to en­sure that your loan re­pay­ment ends on or be­fore your re­tire­ment age.

Even if loan eligibility is not a con­straint, you should opt for as long a ten­ure as pos­si­ble. This way you re­tain the flex­i­bil­ity of low EMIs and at the same time, you can pre-pay the loan when­ever you have sur­plus funds. Since there are no pre­pay­ment pay­ments cur­rently on float­ing in­ter­est loans, the part pay­ment will not have any cost im­pli­ca­tions. I took a home loan of R6 lakh in 2005. Is it pos­si­ble to trans­fer the loan to my brother? My brother is a salaried em­ployee and is el­i­gi­ble for a home loan.

—Ravneesh Chaura­sia A home loan can­not be trans­ferred. You will have to close the loan to be able to sell the prop­erty to your brother. He can get a loan based on his in­come.

There is no such thing as a trans­fer of a loan. The pre­vi­ous owner (you) will have to fore­close the loan and your brother will be given a fresh loan. If the bank is the same, the over­all process is likely to be eas­ier than oth­er­wise.

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