CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

My take-home salary is ₹ 51,000 a month and I am plan­ning to buy a house worth ₹ 28 lakh (In­clud­ing ameni­ties). I’ve been told that I need to ar­range 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. Are there al­ter­na­tives to cover the down pay­ment and regis­tra­tion. I be­lieve fi­nan­cial com­pa­nies pro­vide a max­i­mum of 80% on the cost of prop­erty (In­clud­ing regis­tra­tion and stamp duty). Is this true? The max­i­mum I can ar­range now is ₹ 4 lakh. Please ad­vise.

—Santosh Ku­mar Yes, you are right. The lenders can grant loan up to 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 atleast 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 pay­ing for the mar­gin money. In case you find ar­rang­ing the funds for down pay­ment dif­fi­cult, 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. They are ready to give a loan @11.5%, but I am not sure of other charges levied by them from time to time. They are ask­ing me to take a money back pol­icy of ₹ 25,000 pre­mium/year payable for five years ie a to­tal pay­out of ₹ 1.25 lakh and an in­sur­ance pol­icy for seven years whose pre­mium is ap­prox­i­mately ₹ 5lakh. Does the govern­ment or RBI have any con­trol over them for charg­ing in­ter­est rate and other charges.

—Sharmila Singh I fail to un­der­stand why you want to pay a 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% to 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 bet­ter in­ter­est rate.

There are sev­eral ben­e­fits of tak­ing an in­sur­ance poli- cies when you take a home loan.

First, a term in­sur­ance pol­icy will pay off the loan amount in case of an un­for­tu­nate death of the pol­i­cy­holder, thus sav­ing the 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 pol­i­cy­holder 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.

Most banks only pro­vide in­sur­ance fa­cil­ity as an add-on (for which the bor- rower needs to pay an ex­tra amount) and if the bor­rower has not cho­sen the fa­cil­ity, then there is no in­sur­ance cover. Buy­ing 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 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 an in­sur­ance pol­icy from another in­sur­ance com­pany. Harsh Roongta is CEO, Apna Paisa. He can be reached at ceo@ap­na­paisa.com

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