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HT Estates - - HTESTATES - Harsh Roongta

I have a dual rate home loan of ₹ 15 lakh over a seven-year term or payable in 84 in­stall­ments from Jan­uary 2011. My monthly EMI is

₹ 23,896. If I re­pay it fully within four years, would I then get any in­ter­est ben­e­fit?

— Ro­hit Agar­wal Pre­pay­ment will re­sult in sav­ings in in­ter­est though it does not bring down the per­cent­age cost of bor­row­ing. Se­condly, you won’t have to pay any penalty on fore­c­los- ure of loan even if it is in the fixed rate stage as NHB (Na­tional Hous­ing Bank) has banned pre­pay­ment charges for loans pre­paid from own sources of in­come even if they are at a fixed rate.

Re­mem­ber that the de­ci­sion to pre­pay the ex­ist­ing home loan is de­pen­dent on sev­eral fac­tors. First and fore­most are the in­come tax ben­e­fits avail­able on the ex­ist­ing loan. You should also take into ac­count the post-tax re­turns on al­ter­na­tive in­vest­ment op­tions avail­able to you and com­pare it against the post-tax in­ter­est cost of the loan.

You should also note that be­fore you opt to pre­pay your home loan, it is al­ways ad­vis­able to pay off all other debts on which you are pay­ing higher in­ter­est be­cause the rate of in­ter­est on such bor­row­ings is nor­mally higher than home loans. En­sure that you keep some funds avail­able to meet any fi­nan­cial contin­gency.

We have pur­chased an under-con­struc­tion flat in Thane and the cost of the flat is around ₹ 61 lakh. The flat is in the name of our son (pri­mary), and our names (par­ents) are sec­ondary. We got a sanc­tioned loan of ₹ 22 lakh in the name of our son and we have al­ready paid the mar­gin money. He is now get­ting mar­ried and would like to know by virtue of his mar­riage if an ad­di­tional loan of ₹ 14 lakh could be ac­quired by his wife al­though her name does not ap­pear in the sale agree­ment which is stamped and reg­is­tered. We are will­ing to re­lin­quish our rights over the said flat by ex­e­cut­ing a gift /sur­ren­der deed in her favour. Is there any other way of se­cur­ing a home loan in her name for the above flat?

— Mri­nalini Das­gupta If you and your son are co- own­ers in the prop­erty, then ev­ery lender will in­sist that you all will have to be cobor­row­ers to the home loan. Re­mov­ing your name as coown­ers or adding the name of your fu­ture daugh­ter-in­law will have stamp duty/ reg­is­tra­tion charges im­pli­ca­tions. After your son’s mar­riage, you can trans­fer the home loan to an­other bank and add the name of your daugh­ter-in-law as a co-bor­rower in the process. The bank may con­sider an ad­di­tional loan amount if the joint in­come of all of you and the prop­erty val­ues jus­tify the ad­di­tional loan. The ad­di­tional loan amount may have a higher in­ter­est rate.

You will need a track record of pay­ment of your EMIs in time to be able to get an of­fer from an­other lender to take over your ex­ist­ing loan. Please note that your daugh­ter-in-law will not be el­i­gi­ble for any tax ben­e­fits if she is not a co-owner to the prop­erty as well. You will only get ad­di­tional loans if your daugh­ter-in-law is earn­ing and has suf­fi­cient in­come to ser­vice the re­quired ad­di­tional loan.

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

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