I wish to transfer my home loan from the BPLR to the base rate system. Please suggest a few home loan providers who give home loans on a base rate basis and those who provide home loans on multiple units systems.
— xyz With effect from July 1, 2010 all new loans financed by banks are at the base rate instead of the BPLR. However, the compulsion to lend with reference to base rate is not applicable in case of housing finance companies. As per the Reserve Bank of India guidelines, you can ask your bank to get your loan migrated from the PLR system to the new base rate system at no additional cost. Once that is done, you will be automatically shifted to the base rate regime, where the rate of interest will be effectively better linked with the current interest rates unlike PLR system where rates are not based on cost of funds of the bank. I am looking for a loan for R10 lakh to purchase land as an investment. Will I get the entire amount of R10 lakh or the loan cover is up to 90-95% of the value. I have other loans to pay.
— zyz Plot loans are more restrictive and available only for non-agricultural plots bought specifically from statutory authorities or developers approved by the specific lender. Normally, lenders will not finance more than 60% to 65% of the total cost of the plot and the remaining 35% to 40% has to come from your own sources.
Different banks assume that a certain portion of your income is available for payment of EMIs for loans. It varies from bank to bank and there is no standard norm/formula. But normally the bank will assume that around 45%-50% of your net salary is available for payment of EMI to serve all the loans. Hence, your existing loans will also have an impact on your loan eligibility and the lender will calculate the eligibility based on the existing outstanding amount and the EMI being paid now. My flat’s registration value is R6 lakh and home loan was worth R5.40 lakh. Later I switched the loan to another bank and took a top up loan of R18 lakh. I recently received a certificate showing the principal and interest as paid. Can I claim tax benefit for R18 lakh?
— zuzuz You can get tax deduction benefit on the top-up loan if you have documents to prove that the loan was used for construction / repairs /reconstruction /renewal of the residential property. The tax benefit is available only on the interest portion of the loan under section 24. Moreover, if the loan has been used for earning any other income, you can claim the interest paid on the top up loan against such income. However, if the loan has been used for consumption purposes then the interest payable on such a loan is not deductible.