I’m aware that interest on a home loan for an under-construction property can be claimed in five equal instalments in five years after the possession of the property. Please clarify if it is compulsory to take the claim in the first five financial years from possession or if it can be taken later too.
— Sanjay Singh Interest on housing loan on an under-construction property has an element of ‘preconstruction period interest’ which belongs to the period starting from the date of borrowing up to the end of the financial year immediately prior to the financial year in which construction was completed. As per income tax provisions, the preconstruction period interest can be claimed as deduction in five equal instalments starting from the financial year in which construction was completed and the next four years.
Hence, it can be claimed
Apart from home loan interest rate, what other incentives should I negotiate from the bank?
— Vikram Shrivastava You can negotiate with banks for the following in addition to the interest rate while availing a home loan: waiver or reduction in processing fee and pre-payment penalty charges and free property insurance.
I have a home loan from an insurance company but am yet to get possession of the unit. I have paid the amount to the builder. Can I get the home loan cancelled?
— Harshvardhan Singh Assuming that a part of the loan has already been disbursed towards the under construction property, you will have to pay back the loan disbursed as well as a prepayment penalty (if any) if you want to cancel the loan. If the loan has been sanctioned recently, you can always decide not to avail the disbursement of the loan without any further liability on your part, but you may lose the amount paid as processing fee.
I had applied for a home loan from a finance company but it was rejected. However, they charged a processing fee of ₹ 2,247. Is it legal to do so?
— Mahesh Bhalla Processing fee is charged to get the loan application processed. This fee is non-refundable in most cases. If you examine the loan application form, you will most probably see a line in bold print that says that the processing fee is non-refundable. However, if you have been promised that the fee will be refunded if the loan is not sanctioned, you should lodge an official grievance with the lender.
Can I take a home loan from my father? If yes, how much can I borrow and will I be eligible for all types of deductions for instalment and interest repayment?
— Sumit Saxena There are no complications on taking a home loan from your father or relatives. In respect of the loan taken from your father, you will be able to claim deduction for interest payable on such a loan. You will have to obtain and keep on record a certificate of interest payable for housing purpose. However, you will not be able to claim any tax deduction benefits for the principal amount of loan repaid to your father under section 80 C.