CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

My monthly take-home salary is

₹ 51,000. I plan to buy a home worth ₹ 28 lakh. I un­der­stand that I need to ar­range for 20% of the prop­erty value as down pay­ment, which is ₹ 5.6 lakh, and an­other ₹ 2 lakh for reg­is­tra­tion. I do not have this money. Do we have any al­ter­na­tives to cover the down pay­ment and reg­is­tra­tion? Also, is it true that HFCs pro­vide a max­i­mum of 80% on the cost of prop­erty (in­clud­ing reg­is­tra­tion and stamp duty)? The max­i­mum I can ar­range now is ₹ 4 lakh. How do I pro­ceed?

—Shrid­har V Len­ders can grant loan up to a max­i­mum limit of 80% of the agree­ment value of the prop­erty as a home loan. This means that your down pay­ment will have to be at least 20% of the agree­ment value of the prop­erty plus 100% of other costs such as stamp duty, reg­is­tra­tion charges, etc.

Prac­ti­cally, you can use the bal­ance from your sav­ings bank ac­count or pro­ceeds of the in­vest­ments sold for the pur­pose of pay- ing for the mar­gin money. Al­ter­na­tively, you can look for friendly loans from your fam­ily mem­bers / friends. If that is not pos­si­ble, then you can look for se­cured loans against tan­gi­ble mov­able se­cu­rity such as jew­ellery, NSC, bonds, shares, units of mu­tual funds, or life in­sur­ance pol­icy with high sur­ren­der value.

I want to take a home loan from an NBFC (non-bank­ing fi­nan­cial com­pany). They are ready to give me a loan at an in­ter­est of 11.5%, but I am not sure of other charges levied by them. The NBFC is ask­ing me to take a money-back pol­icy of

₹ 25,000 pre­mium/year payable for five years, ie, to­tal pay­out of ₹ 1.25 lakh and an in­sur­ance pol­icy for seven years for a to­tal pre­mium of ₹ 50,000 ap­prox­i­mately. Is there any con­trol by gov­ern­ment au­thor­i­ties or RBI on them for changing their in­ter­est rate or other charges?

—Ravi Khullar I fail to un­der­stand why you want to pay higher in­ter­est rate when the cur­rent (July 2014) com­pet­i­tive rate in the mar­ket for a home loan amount of up to ₹ 75 lakh (as­sum­ing it is below

₹ 75 lakh) is around 10.15% - 10.25%. If your credit his­tory is good, you should eval­u­ate the op­tion of tak­ing a loan from a lender who can pro­vide you a more com­pet­i­tive in­ter­est rate.

There are sev­eral ben­e­fits of tak­ing ap­pro­pri­ate in­sur­ance poli­cies when you take a home loan.

Firstly, a term in­sur­ance pol­icy will pay off the loan amount in case of the un­for­tu­nate death of the pol­i­cy­holder, thus sav­ing de­pen­dents from the bur­den of pay­ing off the home loan.

A crit­i­cal ill­ness plan and ac­ci­den­tal dis­abil­ity plan for the loan amount value will also en­sure that the loan amount is paid off, should the pol­icy holder be dis­abled due to a se­vere ill­ness such as or­gan fail­ure, etc or due to an ac­ci­dent. Thus buy­ing th­ese kind of poli­cies make sense and you should make sure you buy them all.

Most banks only pro­vide in­sur­ance fa­cil­ity as an ad­don (for which the bor­rower needs to pay extra) and if the bor­rower has not cho­sen the fa­cil­ity, then there is no in­sur­ance cover. Buy­ing of such in­sur­ance from the in­sur­ance com­pany, which has a tie-up with the lender is not com­pul­sory. If the bank in­sists on an in­sur­ance pol­icy, you can al­ways buy in­sur­ance from any other in­sur­ance com­pany and as­sign the same to the lender. If your lender does not agree, there are plenty of other len­ders in the mar­ket who will agree to ac­cept in­sur­ance pol­icy from an­other in­sur­ance com­pany.

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

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