I wish to purchase a flat with my daughter. While I am retired my daughter works in a private firm. Are we eligible for a housing loan? Also in future, I wish to sell my ancestral property (which is not possible as of now) to repay the loan. Kindly enlighten us about the tax liabilities that are involved in the repayment process.
— AK Sharma Not all banks will readily provide a joint loan where the co-borrower is a father and daughter. This may be possible if your daughter is the only child and heir and you agree to assure the bank (through appropriate documentation) that she will inherit your share of the house eventually.
Since you are a retired person, the lenders will consider only the income of your daughter while determining the overall loan eligibility.
As per RBI and NHB (governs housing finance companies) notification, no lender can charge penalty on prepayment of home loans taken on floating rate of interest, irrespective of the source of funding, so you should not have any issues related to pre-payment charges while prepaying the loan in the future.
The decision to prepay the existing home loan is dependent on several factors. First and foremost are the incometax benefits available on the existing loan.
You should take into account the post tax returns available on alternate investment options and compare it against the post tax interest cost.
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.
Please make sure to keep some funds available to meet any financial contingency.
There are no tax liabilities on repayment of the home loan. Tax implications can only arise if you sell the property purchased with a home loan within a period of five years from the end of the year in which the loan was taken.
I have ₹ 25 lakh in hand and would like to buy a house worth ₹ 45 lakh. I earn ₹ 3.5 lakh annually. Is it possible to get a loan? Also the building is about 20 years old. What is likely to be my EMI amount?
—RK Dhawan Banks can finance only up to 80% of the agreement value of the property. If you are below 40 years of age you should be eligible to receive a loan amount of around 4 – 4.5 times of your gross annual income, provided you have no other loan to service subject to 80% of the property agreement value. With an income of ₹ 3.5 lakh per anum and assuming you have a good repayment track record on loans and credit cards (if any) you will be eligible for a loan amount of about ₹ 14 lakh to ₹ 16 lakh for a tenure of 20 years at an interest rate of 10.15% to 10.25% per annum.
Hence, for a property worth ₹ 45 lakh, the bank can lend up to ₹ 36 lakh, but since you are eligible for only ₹ 14 lakh to ₹ 16 lakh, the balance amount of ₹ 29 lakh to ₹ 31 lakh plus stamp duty and registration charges will have to come from your own sources. Banks are normally wary of lending loans for old properties. But if the property is in good condition, there should’nt be any problem.
Harsh Roongta is CEO, Apna Paisa. He can be reached at email@example.com