I took out a home loan of R12 lakh from a public sector bank for 15 years in 2011. My EMI was R13,080 but the bank has been deducting R14,000 every month since I opted for ECS. They have told me that my loan would be cleared before time. Is this true?
—R Malik The rate of interest as per the original EMI comes to 10.25% per annum and on the basis of the ECS amount, it seems the rate of interest is 11.48% per annum. The best way to ascertain the effective rate of interest is to ask for the amortisation schedule (break-up of instalments into principal and interest component) of your loan. This will help to you clearly understand the rate of interest being charged now. Even if the effective rate of interest is only 10.25%, the bank is not justified in debiting a higher EMI without any valid reason. You can approach the branch manager of the bank from where you have taken the loan and ask for a clarification on the discrepancies in the EMI amount. Put in a written communication for the same. If you are not satisfied with the response received from the branch, you can address your grievance to the nodal officer of the bank, details of which are given on the bank’s website.
If you are not satisfied with the response from the bank or do not get any response within four weeks of your complaint to the nodal officer, you should file a complaint with the banking ombudsman on the Reserve Bank of India website: www. bankingombudsman.rbi. org.in
I am working in an automobile company and want a loan for reconstruction of my old house. The property is in my father’s name.
—Kapil Midha You should apply for the loan with your father as co-borrower as he is owner of the property. The lenders will treat this as a self-con- struction loan. For this, you have to submit the approved plans along with detailed cost estimates from an architect or a civil engineer. Since you are not an owner or co-owner in the property you will not be eligible for any tax benefits in respect of the loan repayments even if the loan is sanctioned based on your income and you service this loan. The lender has to be reassured about the fact that the title will pass on to you after your father and that you will continue making the payment.
I have taken a home loan from a bank. I was paying pre-EMI for last two years but the flat is not completed and the builder is absconding. The bank has disbursed 90% of the amount already without even inspecting the property. Last year I got married and since then I have not been able to pay the pre-EMI (now it’s been changed to actual EMI by bank and the amount has been rounded). Now I’m not getting a home loan and we are stuck. What can we do?
—Kaushik Mukherjee Whilst the bank’s approval is a good indicator of the legal title of the property it is in your interest to carry out your own due diligence of the property and the builder before buying it. It is the buyer who is responsible for checking on the property title or the possibilities of a delay in construction and the associated risks. Your liability to service your home loan is independent of your inability to get possession of the property either due to legal dispute or fault on the part of the builder. The bank does not take the responsibility for any delay on the part of the builder in construction due to any reason. You should have continued to pay the EMI in order to maintain good credit rating. By not paying the pre-EMI for the last one year you have spoiled your credit history and that has very long-term impact on your ability to borrow from the credit system be it credit card or any kind of loan. This spoiled credit history is responsible for your inability to get any home loan now. Unless you settle your old home loan there is no chance for you to get any fresh home loan from any lender.