My husband’s salary is ₹ 6 lakh per year. We want to buy a house for around ₹ 60 lakh. Which bank willgive us a loan?
— Sangit Srivastava The quantum of loan which your husband can get is dependent on his annual income and banks will not lend him anything above this amount. Also, the value of the property is significantly higher. If he is less than 40 years of age, he should be eligible for around 4 to 4.5 times of his gross annual income as loan, provided he has no
other loan to service. I want to buy a house with my cousin. Will banks give us a joint loan and is it possible for us to get the property registered separately?
— Narayan Swami There is no restriction as to who can jointly own a property. As far as joining as a coborrower in a home loan is concerned, only a spouse or a close relative such as siblings, parents or children can be permitted by banks to get joint loans. It is, therefore, unlikely that cousins want- ing to jointly own a flat can get a home loan. Secondly, no single property can have two separate registrations under different names. My wife is currently a housewife but may take up a job in the future. Can I include my wife’s name in the loan application later and can we both pay together to the bank in order to avail tax benefits?
— Srishti Shah In case your wife is not a coowner to the said property, she cannot claim tax benefits. If you decide to include her name as a co-owner of the property later, that will have stamp duty implications. To add her name as a loan co-borrower will also entail closing the current loan where you may be the sole owner and borrower and file for a fresh loan application. However, if you have not yet purchased the property and availed the loan, you can still make your wife a coowner and a co-borrower. I had taken a home loan of ₹ 22 lakh in 2005 at an interest rate of 8% for 20 years. I am currently paying an equated monthly installment of ₹ 19,000 per month. I have been claiming tax benefit on my home loan till date. Now I have an outstanding of ₹ 10 lakh which I can pay right away and close the loan. Is it advisable to close the loan or should I continue the loan and avail tax benefits?
— Daksh Ahuja The decision to prepay the existing home loan depends on several factors. First and foremost are the income-tax 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.
Secondly, if you are on fixed rate of interest and taken from a bank, you may have to pay a penalty of around 2% (excluding service tax) on foreclosure of loan.
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.
Also keep some funds available to meet any financial contingencies. I am planning to take home loan on my wife’s name because my Cibil record is bad. My wife is working and getting a salary of ₹ 28,000 per month for the last three years. Can she get a home loan alone and if yes, how much loan will she get? And how can I improve my Cibil score?
— Radha Sawhney With an income of around ₹ 28,000 per month, your wife is eligible for a loan amount of ₹ 12 lakh at the rate of 9.90% to 10.25% per annum for of 20 years.