CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

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 ceo@ap­na­paisa.com

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