I recently secured a loan amount of ₹ 16 lakh from a private bank for a period of 20 years. The interest rate is 10.15 % (floating) and ₹ 7 lakh has already been disbursed. I want to pay ₹ 5 lakh directly to the builder and request the bank to not disburse the full (sanctioned) amount to the builder. Although ₹ 16 lakh have been sanctioned, I required only ₹ 11 lakh. Please advise
— Yaksh Madan You can approach the bank to make arrangements to get the sanctioned loan amount reduced. Please note that the bank may not refund you any portion of the processing fees paid in case you want the loan (already sanctioned) to be reduced.
Any other cost or impact of such reduction in the sanctioned amount is unlikely. I am going to purchase a single storey house with a new construction. After buying it, I want to construct another floor. For all my expenses I am going to take a loan of ₹ 25 lakh from a private financier. Will this money qualify for income tax rebates for principal repayment and interest paid?
— Shuchi Bhagat Normally, tax benefits in respect of interest can be claimed on loan taken from any entity provided you can prove that the loan was taken to acquire the house property.
However, the tax benefits under Section 80C shall only be available if the loan has been taken from specified institution/entities like banks, housing finance companies, governments, public limited companies etc.
Since your financier is an NBFC, your home loan will be eligible for tax benefits. You can avail tax benefits under Section 24B for interest payable (limited to ₹ 2 lakh if the property is self occupied) and up to ₹ 1.5 lakh under Section 80 C for repayment of the housing loan.
However, the deduction under Section 80 C can only be claimed in aggregate with other items of investments like life insurance premium, contribution to provident funds, etc. You can also claim the benefits under Section 24B and 80C for construction of first floor on your existing property if other conditions are fulfilled.
For instance, the construction of the house should be completed within three years from the date of your first disbursement.
I have already paid the processing charges of ₹ 11,400 plus 562 to the bank for the loan amount of ₹ 20 lakh. Just before finalisation of the loan agreement for the housing unit the agent is asking for an extra ₹ 1,000 for stamping the agreement papers. This was not disclosed during discussions for the loan scheme. Should I take up this matter with the bank?
— Nimrat Tyagi Most of the home loan lenders charge processing fee only towards getting your loan application processed and charge separately for out-of-pocket expenses like stamping of loan agreement and mortgage, documentation charges, etc.
Harsh Roongta is CEO, Apna Paisa. He can be reached at firstname.lastname@example.org