We need to take a home loan against a house property which is partly a commercial area. However, the ownership of this property is shared between my husband and his two sisters. Are we still eligible for a home loan against this property?
— Ranjana Kapoor If the purpose of taking the loan is to purchase a residential property, then it is advisable to take a regular home loan and not a loan against property. Home loans are cheaper than other loans (including a loan against the security of an existing property) and you do not have to provide any collateral security except the house being purchased. Your overall loan eligibility will depend on your disposable income and existing borrowings.
You can approach any lender that offers home loans. The lender will evaluate your credit history and your disposable income. In addition to the above, the loan amount will also depend on the value of the property. Most lenders normally provide loans up to maximum of 80% (90% for a loan amount below ₹ 20 lakh) of the agreement value of a house as regular home loan. Home loans are available for a longer tenure (up to 30 years) as compared to a loan against property.
Those unable to get a home loan can take the loan against property. The process for this is the same as getting a home loan, but the rate of interest for a loan is higher. Of course you can always take a loan against gold as a supplemental loan for any additional requirement or to fund the down payment requirement. Please note that in case you decide to take the loan against property, all the joint owners will have to become co-borrowers for your loan.
I am planning to buy a house for which my father is ready to give me a loan. I will repay the EMI to him. How can I claim deduction for this? What documents will I have to submit to the IT department to claim deduction of interest and principal?
— Snighdha Jain
For claiming deduction for the principal portion that forms part of your home loan installment, the loan should be taken from specified entities like central or state government, any bank including cooperative bank, LIC, National Housing Bank, any housing finance company, any cooperative society engaged in providing loans for financing construction of house, your employer who is a public company or public sector company, etc.
Since you are planning to take the loan from your father, you will not get any income tax deduction forcapital repayment of housing loan.
However, as far as payment of interest on borrowed capital is concerned, there is no such restriction. So, you will be able to claim the deduction of interest pay- able up to ₹ 2 lakh in case the property is self-occupied or to the extent of interest payable if the property is let out.
No documents are are required to be submitted along with the income tax return. However, you will need to obtain a certificate from your father stating the amount of interest payable for each year, as the same may be demanded by the income tax officer at the time of assessment. You will also have to prove that the loan was used for the purpose of buying the property.