CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

I have taken a com­pos­ite loan (plot plus con­struc­tion). I re­ceived the loan amount for a plot with the un­der­tak­ing that I start the con­struc­tion of the house in two years. I have now moved to the US which I did not plan at the time of loan dis­burse­ment. I can­not start con­struc­tion till I move back to In­dia and at this point I am not sure when I will go back. Some­one from the bank had called my dad say­ing they will charge 15% in­ter­est till the ac­tual con­struc­tion be­gins. My ques­tion is, can I close the loan by mak­ing a full pay­ment? If not, can I get an ex­ten­sion for house con­struc­tion? Can I park sur­plus money in OD and save 15% in­ter­est rate?

—Anand Iyer Yes, you can def­i­nitely fore­close your loan and since RBI has is­sued a no­ti­fi­ca­tion ban­ning levy of penalty on fore­clo­sure of all float­ing rate loans taken from the banks, you won’t have to worry about the penalty on the pre­pay- ment of loan. Please 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. Also en­sure that some funds are avail­able to meet any fi­nan­cial contin­gency.

Se­condly, get­ting an ex­ten­sion of time for con­struc­tion seems a bit un­likely.

The most ideal op­tion is to put your sur­plus money in your linked ac­count, which is as good as pre­pay­ment. It will al­low you to use both your tem­po­rary and per­ma­nent cash sur­pluses to re­duce your in­ter­est li­a­bil­ity on your home loan and at the same time re­tain the flex­i­bil­ity of with­draw­ing the sur­pluses for other uses as and when you may re­quire.

I would like to take a mort­gage loan against a prop­erty that is in my fa­ther’s name but the prob­lem is that I have a low Cibil score of 595. Will I get a mort­gage loan of R34 lakh for a prop­erty that is worth R60 lakh?

— Rekha Dad­lani A Cibil score below 650 is not con­sid­ered good. Your score of 595 could be be­cause of re­cent and rel­a­tively lower value credit his­tory or it could be be­cause of some de­fault in the past.

If this is the case, then you can jointly ap­ply for a loan with your fa­ther since he is the owner of the prop­erty. Typ­i­cally, you can get up to 50% to 60% of the value of the prop­erty or twice your an­nual in­come (which­ever is lower) as a loan against prop­erty. It is avail­able gen­er­ally for a pe­riod rang­ing be­tween 5 years to 15 years. Most len­ders get the prop­erty val­ued in­de­pen­dently and they will pro­vide the loan based on the value in­di­cated by their val­uer rather than the mar­ket value as per­ceived by you. Gen­er­ally, the val­u­a­tion as de­ter­mined by the lender’s val­uer is lower than the mar­ket value as per­ceived by you, hence the loan amount gets re­duced.

If your score is low be­cause of a de­fault shown, it will be dif­fi­cult to get a loan. But you can re­build your credit his­tory by tak­ing a se­cured credit card (se­cured against FD) or loan against tan­gi­ble mov­able se­cu­rity such as FD/jewelry / shares /units of mu­tual funds/life in­sur­ance pol­icy with high sur­ren­der value etc.

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

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