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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.

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