CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

I re­cently grad­u­ated from a univer­sity in US and will be start­ing work soon. Can I be­come a co-ap­pli­cant or co-signer for a home loan with my fa­ther here in In­dia? I want this be­cause he is near­ing re­tire­ment and will be get­ting a lesser amount as home loan. I want to co-ap­ply with him so that he gets a suf­fi­cient loan amount.Is this pos­si­ble or can you sug­gest a bet­ter al­ter­na­tive?

—Sudesh Rao Of course you can be­come a co-ap­pli­cant (that’s the term we use in In­dia rather then the term co-signer which is more com­monly used in the US) with your fa­ther. It may not add much weight to your fa­ther’s sanc­tion process though as most len­ders would want to look at a track record of earn­ing of at least two years be­fore they con­sider your earn­ings for ap­prov­ing a much higher joint loan. Hav­ing said that, len­ders def­i­nitely will make ex­cep­tions to the rule if you have grad­u­ated from well-known in­sti­tu­tions and have a job with well­known com­pa­nies. It def­i­nitely is worth a try.

I have a plot in a colony. I need a loan of ap­prox­i­mately ` 10 lakh for con­struc­tion. I al­ready have a per­sonal loan. Please sug­gest the best way to get a loan for con­struc­tion.

—Shivam Sood You will have to sub­mit an

es­ti­mate of the to­tal cost of con­struc­tion, duly cer­ti­fied by an ar­chi­tect/civil engineer.

The loan will be re­leased in parts, based on the progress of the con­struc­tion. The lender may also in­sist on send­ing his own tech­ni­cal per­son­nel to as­sess the progress of con­struc­tion or may de­cide to rely on cer­tifi­cates/pho­to­graphs sub­mit­ted by you.

Some len­ders are not com­fort­able fund­ing self-con­structed prop­er­ties and hence, your choices will be limited. You can talk to all the stan­dard len­ders for avail­ing a con­struc­tion loan.

Your ex­ist­ing per­sonal loan will also have an im­pact on your con­struc­tion loan el­i­gi­bil­ity and the lender will cal­cu­late your el­i­gi­bil­ity based on the EMI be­ing paid now and the room left to pay an ad­di­tional EMI for an­other loan on the ba­sis of your earn­ings. What are the tax im­pli­ca­tions if a per­son buys a house with a loan and sells it (a) within three years, (b) af­ter three years? Fur­ther, what is the im­pact on ben­e­fits re­lated to in­ter­est and cap­i­tal re­pay­ment?

—Su­bodh Sharma If you sell a house within a pe­riod of three years from the date of tak­ing pos­ses­sion, the dif­fer­ence be­tween the cost price and the net price shall be treated as short-term cap­i­tal gains and will be in­cluded in your other in­comes and taxed ac­cord­ingly. But, if the sale takes place af­ter three years, then the profit shall be treated as long-term cap­i­tal gains and will be taxed at 20% af­ter in­dex­a­tion. You can save on long-term cap­i­tal gains by in­vest­ing the cap­i­tal gains in an­other house prop­erty or bonds. In case you sell the house pur­chased with a loan

within a pe­riod of five years from the end of the fi­nan­cial year in which pos­ses­sion of the prop­erty was taken and claim tax ben­e­fits un­der Sec­tion 80 C in re­spect of the prin­ci­pal por­tion of the loan, all the de­duc­tions al­lowed in re­spect of the prin­ci­pal por­tion of such a loan will be treated as in­come of the year in which the house was sold.

A bank in its doc­u­men­tary re­quire­ments has asked for proof of the ori­gin of own con­tri­bu­tion. Is this

an ac­cepted norm in the in­dus­try?

—Shikha Shah The bank def­i­nitely is in­ter­ested in know­ing how you are fund­ing your down pay­ment con­tri­bu­tion. If you have bor­rowed for the pur­pose of mak­ing the down pay­ment, it is likely to put pres­sure on you in the fu­ture and thus af­fect the ser­vic­ing of the home loan.

Harsh Roongta is CEO, Apna Paisa. He can be reached at ceo@ap­na­paisa.com

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