CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

Can we con­tinue to get in­come tax ben­e­fit on pre-EMI in­ter­est (last two in­stall­ments of to­tal five) even if we have pre­paid all the home loan. Kindly clar­ify.

—Rishi Sharma In re­spect of in­ter­est paid on loan taken for un­der­con­struc­tion prop­erty, you can­not get the in­come tax benefits in re­spect of in­ter­est paid dur­ing the year if the prop­erty is un­der con­struc­tion dur­ing that year. I have a query re­gard­ing top floor con­struc­tion on ex­ist­ing house. We have a house, which is in my mother’s and brother’s name. This house is un­der con­struc­tion loan from a bank. Can I con­struct one floor above this house by tak­ing a loan on my name for this top floor? Kindly sug­gest what I should do.

—Aquil Khan It is a very com­plex sit­u­a­tion. You will need to ap­ply for a home ex­ten­sion loan based on your in­come. How­ever, your mother and brother will have to be cobor­row­ers to the loan as they are the own­ers of the prop­erty. (An ex­ten­sion to a prop- erty is au­to­mat­i­cally a part of the prop­erty). Se­condly, only the ex­ist­ing lender may grant you a loan on a prop­erty, which is al­ready mort­gaged to them, pro­vided they al­low broth­ers as cobor­row­ers.

More­over, since you are not co-owner of the prop­erty, you will not be able to claim tax benefits, which are avail­able for re­pay­ment of home loans. So ap­proach the ex­ist­ing lender as no other bank will lend as the prop­erty sub­ject mat­ter of con­struc­tion is al­ready mort­gaged with them. An­other op­tion for you is to en­ter into an agree­ment with your mother and brother and get legal rights to a part of the plot or to the sec­ond floor. This agree­ment will need to be stamped and reg­is­tered. It will also have to be ap­proved by the ex­ist­ing lender. I want to take a loan on a house that I own, and have de­cided on a pri­vate bank. Up to how much amount can I bor­row on this prop­erty? Can I bor­row a higher per­cent­age of the value of the prop­erty from any other bank at sim­i­lar rates?

—Gauri Pa­tel The loan is given as a cer­tain per­cent­age of the prop­erty’s mar­ket value, which is usu­ally around 40% to 60%. Please note that most banks get the prop­erty val­ued in­de­pen­dently and they will pro­vide the loan based on their val­u­a­tion. In most cases the val­u­a­tion as determined by the banker’s valuer is sig­nif­i­cantly lower than the mar­ket value you per­ceive. If you are salaried /self-em­ployed, banks takes into ac­count the num­ber of years you have left for your re­tire­ment.

The lender eval­u­ates your re­pay­ment ca­pac­ity based on your in­come, sav­ings, and debt obligations, other than house­hold ex­penses to de­ter­mine the amount of loan you are el­i­gi­ble for.

There may be some vari­a­tion from bank to bank as to the amount of loan, which you can get against your prop­erty. I have taken home loan from a prom­i­nent lender in 2012 with 10.70% fixed rate of in­ter­est for three years. Now I want to trans­fer the loan to a na­tional bank. In Septem­ber 2015, my cur­rent home loan changes to float­ing rate. Shift­ing my loan means I have to bear pre­pay­ment charge. Is this the right time to trans­fer my home loan or I should wait till Septem­ber 2015?

– OP Tri­pathi You are pay­ing a high rate of in­ter­est. The cur­rent in­ter­est rate on home loans for cus­tomers with good track record in the na­tional bank you men­tion is 9.90% and there is no rea­son for you to pay more. It is ad­vis­able to trans­fer your ex­ist­ing loan or any other lender where you will get around 9.90% to 9.95%.

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