CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta Ap­pli­ca­ble ROI: Cur­rent ap­pli­ca­ble spread on the above loan: Cur­rent ap­pli­ca­ble ROI: Bal­ance term: Rate re­viewed ev­ery: Next re­view due date: Last EMI payable:

I am 33 years of age and my monthly in­come is ₹ 75,000. I have taken a home loan of ₹ 25,00,000 and would like to make a pre­pay­ment of ₹ 2.5 lakh. How will do­ing this ben­e­fit me? My EMI is ₹ 32,500. The loan was taken six months back and I also want to know the sav­ings.

— Nagb­hushan When you make a pre­pay­ment of your loan, the amount is de­ductible un­der Sec­tion 80C (along with the other items men­tioned in that sec­tion) up to the limit of ₹ 1,50,000 men­tioned there- in. Also, your in­ter­est pay­ment li­a­bil­ity will re­duce in the fu­ture, ei­ther by way of a re­duced EMI amount or lesser num­ber of EMIs. There will be no pre­pay­ment charge if the loan is a float­ing rate loan. How­ever, if you have even more ex­pen­sive loans (such as per­sonal loan or credit card debts) please clear those be­fore you pre­pay the home loan. I would like to know if a co-ap­pli­cant for home loan should also be one of the buy­ers men­tioned in a buy­ers agree­ment.

— Sachin Gu­gale All buy­ers men­tioned in the agree­ment com­pul­so­rily have to be co-ap­pli­cants for the home loan, but it is not manda­tory for all co-ap­pli­cants to be buy­ers. For ex­am­ple, if a prop­erty is be­ing bought in the sole name of the wife, the hus­band can be a co-ap­pli­cant in the loan for bet­ter loan el­i­gi­bil­ity chances. You should also know that if you are not a co-owner you will not be el­i­gi­ble for any tax benefits on the loan re­pay­ments even though the loan is re­paid from your funds. I had taken a home loan of ₹ 7 lakh from a pri­vate bank at 10.75% float­ing rate. When I had talked to the bank re­gard­ing the in­ter­est rate it ad­vised me to pay some amount. Please ad­vise whether I should take this op­tion.

(Bank) RPLR mi­nus ap­pli­ca­ble spread per an­num I have re­ceived the fol­low­ing in­for­ma­tion from the bank: The po­si­tion of your loan ac­count as on April 01, 2015 is as fol­lows: 69 months 3 months June 1,

2015

6.00 %

10.75%

Dec 2020 — Rakesh Dhin­gra In In­dia, un­for­tu­nately, a float­ing rate loan means that the rate floats up­wards when in­ter­est rates rise but they don’t float down­wards when in­ter­est rates drop. Un­der pres­sure from the mar­ket and the reg­u­la­tors, how­ever, the lenders “al­low” you to shift to the new lower float­ing rate on pay­ment of fees. So, by pay­ing about 0.28% of the out­stand­ing loan amount you should be able to shift to the new rate of 9.90% that is avail­able to new bor­row­ers. Given that the loan amount is not large enough to at­tract other banks, this might be the best course of ac­tion. Please guide me on the process of shift­ing a home loan from a pri­vate to a public bank. What are the spe­cific ad­van­tages? I also want to know how to avail float­ing and fixed in­ter­est rate for a home loan.

— Neeti Ahuja You should shift your loan only if the new bank is of­fer­ing you lower rates of in­ter­est and the cost of shift­ing (in this case it is the 0.20% mort­gage fees plus a small ad­min­is­tra­tive charge) is low enough to jus­tify the ben­e­fit. Some public banks have an over­draft fa­cil­ity which might be use­ful for you.

As far as float­ing or fixed rates are con­cerned, in the cur­rent en­vi­ron­ment when in­ter­est rates are ex­pected to go down (notwith­stand­ing the cur­rent up­trend in in­ter­est rates in may be­gin­ning ) it makes no sense to lock into a fixed rate.

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