As of now, I have a (floating rate) home loan outstanding worth ₹ 5.85 lakh (₹OI 10.5%). The outstanding tenure is 145 months. Does it make sense to pay off the loan by taking a personal loan for five years?
—Shagun Bedi Please note that an unsecured personal loan is very expensive in comparison to a home loan. If you wish to pay off your home loan in the next five years, you can request your lender to reduce the tenure of your loan by increasing the EMI. Alternatively, you can part prepay your loan (assuming it is floating rate) whenever you have extra funds. Prepayment penalty is waived off by banks and housing finance companies on all home loans given under floating rate. Which is a better option for housing loan repayment? Reduced EMI or a reduced tenure?
—Samant Gokhale If loan eligibility is a constraint, go for the longest possible tenure. You should ideally opt for a longer tenure (floating rate) loan. This way you manage the flexibility of low EMIs and at the same time you can prepay the loan without any penalty whenever you have surplus funds. There is no additional cost involved if you opt for a longer tenure. The interest which you will pay is dependent on the time for which you use the money.
If you are getting the loan amount you require at the lower tenure and are also confident about paying off the higher EMI then you should opt for a shorter tenure. Are there any prepayment charges applicable in case a loan is repaid by another bank ?
—Harish Goel As far as the loan taken from housing finance companies is concerned, NHB has issued instructions not to levy any prepayment penalty if the loan is under floating rate, whatever be the source of repayment.
For HDFC if the loan is taken under fixed rate, prepayment penalty cannot be levied if the loan is repaid from the borrower’s own sources (which means any source other than takeover by another housing finance company/bank).
As far as banks are concerned RBI has instructed them not to levy any prepayment penalty on loans under floating rate. There are no such similar instructions as housing finance companies in respect of repayment of home loans under fixed rates. Could you please comment on tax implication on 100% loan disbursement for an under construction property which would take 2-3 years for completion.
—Akash Desai What this means is that for interest paid on a loan taken for an under construction property, you cannot get income tax benefits in respect of interest paid during the year in which the property is under construction. However, you can claim all the interest payable for the construction period excluding the year in which it is completed, in five equal installments beginning from the year in which you take possession of the property. This way the overall claim of interest will be within the limit of R1,50,000 in case the property is self-occupied. However, the benefits under section 80C for principal repayment is lost for the construction period and cannot be claimed later. If a minor and an adult are mentioned in a will, can they get a loan?
—Ranjit Kapoor No loan is given on a property in which a minor has ownership intent as such a property cannot be mortgaged.