CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

I am plan­ning to buy land. Can I ap­ply for a home loan for this or do I have to ap­ply only for per­sonal loan or is there any bank that of­fers home loan for buy­ing a plot?

—M K Vohra To buy a piece of land to con­struct a house, you can get a plot loan based on your in­come and the ti­tle of the prop­erty. Plot loans are more re­stric­tive and avail­able only to non-agri­cul­tural plots bought from statu­tory au­thor­i­ties or ap­proved de­vel­op­ers.

Nor­mally, lenders will not fi­nance more than 60% to 65% of the to­tal cost of the plot and the re­main­ing 35% to 40% has to come from your own sources. Also, plot loans are more ex­pen­sive and avail­able for shorter tenures (5 to 15 years) un­like a reg­u­lar home loan.

If you are plan­ning to self-con­struct a house on the same plot you can take a com­pos­ite loan. The com­pos­ite loan is given to cover the cost of land as well as cost of con­struc­tion on such plot. By tak­ing a com­pos­ite loan brings more ben­e­fits in terms of fi­nanc­ing as well as tax ben­e­fits. The loan fi­nanc­ing in case of a com­pos­ite loan goes up to 80-90% of the prop­erty value as com­pared to the plot loan’s 60-65%. More­over, you can get tax ben­e­fits un­der sec­tion 80C for the prin­ci­ple re­pay­ment and Sec­tion 24 for the in­ter­est paid on the com­pos­ite hous­ing loan, in­clud­ing the cost of the plot. Pure plot loans are not el­i­gi­ble for any tax ben­e­fits.

Some lenders are not com­fort­able fund­ing self­con­structed prop­er­ties and hence, your choices will be limited. You can ap­proach SBI, Axis Bank, HDFC Ltd, ICICI Bank, etc for avail­ing the com­pos­ite loan. What is the pro­ce­dure to re­pay the full amount of the home loan? Please tell me the need­ful ac­tion

—Ma­hesh Rath The bank will typ­i­cally pro­vide you the es­ti­mated amount, on pay­ment of which the out­stand­ing loan will be fully paid off. This amount in­cludes the pre­pay­ment charge, if any, charge­able by your bank and will list the doc­u­ments held by them which will be re­leased on pay­ment of the stated amount. This amount men­tioned is typ­i­cally cal­cu­lated as on a fu­ture date, to en­able time for you to ar­range the pay­ment.

After the pay­ment of all dues, the bank will re­turn your orig­i­nal doc­u­ments and is­suea loan clo­sure let­ter in­di­cat­ing that there is no out­stand­ing amount to be paid. Please make sure you get the no dues cer­tifi­cate to ob­vi­ate any is­sues in the fu­ture when you pay the full out­stand­ing amount on your home loan.. Can I get a home loan of ₹ 15 lakh with a net salary of ₹ 27,250 but with­out prov­i­dent fund de­duc­tion?

—Ra­man Aulakh For a salaried per­son if you have Form no 16, that can be the proof of salary in­come suf­fi­cient for es­tab­lish­ing your reg­u­lar source of in­come. If the salary has been di­rectly cred­ited into a bank ac­count reg­u­larly then even if you do not have Form 16 or have not filed in­come tax re­turns, the proof of salary state­ment for last three year can be suf­fi­cient for es­tab­lish­ing your reg­u­lar source of in­come. It will be dif­fi­cult to get the loan if the salary is be­ing paid in cash and you have no such proofs.

Of course the amount of loan will de­pend on the an­nual in­come. If you are less than 40 years of age, you should be el­i­gi­ble for 4 to 4.5 times of your gross an­nual in­come as loan.

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