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I have taken a hous­ing loan from a pri­vate bank as ‘Res­i­dent home loan-vari­able rate-monthly rest.’ I find the ROI be­ing charged is 14% since last Jan 2014. It has never de­creased in line with their cur­rent ROI. The bank of­fi­cials do not re­ply to my e-mails. What should be done? Please ad­vise.

—J Mukherji Cur­rent (Fe­bru­ary 2015) com­pet­i­tive rate in the mar­ket for a loan amount be­low ₹ 75 lakh is around 10.15%10.25%, hence as­sum­ing your loan amount is be­low ₹ 75 lakh you can check if the ex­ist­ing lender is will­ing to re­duce the in­ter­est rate to 10.15%-10.25%, even if it means pay­ing a small con­ver­sion fee of upto 0.28% of out­stand­ing loan amount. This will help you avoid the headache of trans­fer­ring doc­u­ments from one lender to an­other. If the lender is not will­ing to re­duce the rate of in­ter­est, you can eval­u­ate the op­tion of switch­ing the loan to an­other lender.

Since the Na­tional Hous­ing Bank, which gov­erns the hous­ing fi­nance com­pa­nies has al­ready in­structed fi­nance com­pa­nies not to levy pre­pay­ment charges in re­spect of float­ing rate loans you will not have to pay any penalty for shift­ing such loans.

How­ever, you may have to pay some pro­cess­ing fees to the prospec­tive lender, though most of them usu­ally agree to take over your loan from the ex­ist­ing lender with­out any sig­nif­i­cant pro­cess­ing fees. So ef­fec­tively there will be no charge for shift­ing the loan to an­other lender.

You will need to have a good track record of pay­ment to be able to get an of­fer from an­other bank to take over your ex­ist­ing home loan. I have taken a con­struc­tion home loan from a re­puted com­pany in In­dia. The loan amount sanc­tioned is ₹ 30 lakh but the amount dis­bursed is ₹ 10 lakh. I have con­structed my house with the ₹ 10 lakh dis­bursed loan and fi­nanced the re­main­ing with my own funds. The com­pany has charged pro­cess­ing fees on ₹ 30 lakh in­stead of ₹ 10 lakh. My query is, can a com­pany charge a pro­cess­ing fee on the sanc­tioned amount or on the dis­bursed amount? Please help.

— Pramit Singla The pro­cess­ing fee is the fee taken for pro­cess­ing your loan ap­pli­ca­tion and is ei­ther charged as a per­cent­age of the loan amount or a flat amount and is usu­ally non­re­fund­able un­less men­tioned oth­er­wise. So in case you de­cide not to avail the sanc- tioned loan amount, the bank may not be li­able to re­fund any por­tion of the pro­cess­ing fees paid ear­lier for the higher loan amount. I want a home loan but the houses I have seen are lo­cated in au­tho­rised ar­eas and are very ex­pen­sive. Is there any way I can buy an agri­cul­tural plot?

— MK Raut A loan to ac­quire a farm­house (that is what a house on agri­cul­tural land is pop­u­larly called) will be very dif­fi­cult to get as pledg­ing of agri­cul­tural land and the house built thereon is not easy. Your best bet is to get a loan against some other se­cu­rity such as some other im­move­able prop­erty or mov­able se­cu­rity such as shares, units, bonds, jew­ellery or life in­sur­ance pol­icy with high sur­ren­der value. You can use that loan to buy the agri­cul­tural plot. I am in­ter­ested in pur­chas­ing a flat from a pri­vate de­vel­oper but the project is not lo­cated in an ap­proved area. Can I get a loan from a pri­vate fi­nan­cial in­sti­tu­tion?

— T Singh If the pro­posed con­struc­tion falls un­der the list of neg­a­tive ar­eas of the bank, the chances of get­ting fi­nance for the pur­chase of the prop­erty seem bleak. You can try ap­ply­ing to the lo­cal co-op­er­a­tive banks.

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