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Right time to go for a home loan?

July 02, 2009 15:45 IST

Will interest rates go down or move up after the budget? Should you go for your dream house now? Or should you wait till the impact of budget announcements becomes clear for the housing sector?

What can help you to transfer your home loan from one lender to another? What precautions must you take before such a home loan transfer?

Home loan expert Harsh Roongta answered such queries during a chat on July 1.

For those of you who missed the chat, here's the transcript.

 santosh asked, Hi Harsh, I took a loan of 28 lakh from LIC at 8.75% floating rate of interest. I have been hearing that 8.75% is fixed only for 3 month and post that it will revised on 10.25% and it seems loan amount beyond 30 lakh have less floating rate compared to less than 30 lakh bracket.
Harsh Roongta answers,  at 2009-07-01 15:34:17You are right. LICs rate of 8.75% was only for the first 3 months till June 2009 (since then i am told it has been extended to september 30, 2009). With yesterdays reduction it should drop to 9.75% after the low rate period is over. I think the rate for loans of more than Rs 30 lacs is higher by 0.50%. You can compare loan rates on this link

Milav asked, Sir, I am working in dubai and I took loan from here and send india to my place where my parent are living. My doubt is that my father can withdraw Rs.15 lacs by cheque from my NRE account or not.Pls answer me is there any limit on 3rd party withdrawal. My account is in Bank of Baroda.
Harsh Roongta answers, I am assuming that you are an Indian citizen. If you are i am not aware of any regulations that prevent you from withdrawing any amount for purchase of residential property. So the short answer is that if you are an Indian Citizen then there is no restriction at all on the withdrawal required by you wheher made by you or your father.

mao asked, is it ok to go with hra reduction or take a home laon to save tax-My opinion is taht to save tax why we need to have a house loan
Harsh Roongta answers, You never purchase a house just to save on tax. Tax benefits on loan repayments are only an additional benefit for purchasing a house. Secondly you can actually get both. The benefit of deduction of HRA (as long as you actually stay in a rented flat not owned by you) and also take a loan to purchase a residential property. see this article

kavish asked, Dear Sir, I am planning to buy 26 years apt in Chennai. Apt is in good area and in very good condition. I would like to know how much % loan I can get from any bank for such a old apt??
Harsh Roongta answers, Some banks have restrictions based on the age of the apartment at the time of the maturity of the loan. However if the condition is good and teh valuers will certify the value (as well as balance life being more than the loan tenure) then you should easily be able to get the loan on regular terms for regaular tenures.

Raghav asked, My current home loan is 29Lacs @ 11% interest. Should I change to a PSU from Private bank?
Harsh Roongta answers, If you have paid all your installments in time and the loan outstanding today is not more than 85 percent of the value of the property today (and assuming your income is same or more than before) then you should not be paying anything more than 9.25 percent.

ass asked, i have taken personal loan but i have paid 10 instalments after that i stopped paying now is it possible to take home loan for me. is it effects on my home loan request .then how to proced further to get home loan?
Harsh Roongta answers, It would be almost impossible to get a home loan without first fully clearing off the perosnal loan. even is you fully clear the personal loan it would still be a difficult task to get a home loan as your default will be known to all potential lenders through the credit bureau (CIBIL).

alex asked, Can you claim tax benefits for rented out home and your own personal home located in the same city. If so are there any distance limitations
Harsh Roongta answers, Yes you can get tax benefit on interest payable on a loan taken to buy as many house properties as you wish. There are no restrictions. It does have some income and wealth tax implications. You can read a detailed article on this on this link.

Harsh Roongta answers, You will need an gross annual income of around Rs. 10 lacs to be eligible for a loan of around Rs. 40 lacs at the current rates of around 9.25% for 20 years.

Jabs asked, I am planning to buy property of 40 lakh. I would be taking 30 lakh loan. If I make my father as co-applicant as well as co-owner of this property and all EMIs goes from my account. Will both of us can take tax benifits on 1.5lakh of interest amount if say interest is 3lakhs?
Harsh Roongta answers, You will both get tax benefit to the extent of your share in the loan. If the property is self-occupied the limit of Rs. 1,50,000 separately avialable to both of you. Hoever the benefit is available to the extent of your share in the loan. So if the loan is entirely from your share your father cannot get any tax benefit on this.

arun asked, hi i took 16lack home loan from chenturion bank of panjab in 2007 at intrest rate of 9.25. Now it marje with HDFC and my intrest rate is 13%. Please advaise is it worth to transfer lone at lower intersr rate. Pre payment charge is 2%
Harsh Roongta answers, even without any detailed calculation i can tell you that it will be beneficial for you since the current rates are around 9.25 percent. But if you want to do a detailed calculation you can go to this calculator

rishi asked, Sir I have taken a loan for 29Lacs from SBI at 10.35% at floating rate 8 months back now it has come to 9.10%. Is there any chances of Interest coming down further. And as per your view within what period should any person close the loan to save interest money? (in my case i have taken for 20 years). Kindly advise
Harsh Roongta answers, You will save interet whenever you prepay the loan. However to check whether this is cost effective or not you should use this calculator

see asked, Hi Harsh, I have home loan from ICICI and wanted to shift to SBI after referring your site, but SBI needs a guarantor for loan transfer, with property/assets worth loan amount. Why is this limitation? It is making a hurdle for me to shift, please help?
Harsh Roongta answers, Each bank has its own norms and may be your income or credit history does not fit their norms. If you have repaid all your installments on time you should try with other lenders as well (Canara Bank, HDFC, Bank Of Baroda,Axis,etc....).

FASD asked, All Nationalised Banks had annonced concession in interest rate for five years on Home Loans upto Rs. 20.00 Lacs. This scheme was upto 30.06.2009. Whether same has been extended or not.
Harsh Roongta answers, Not to the best of my knowledge.

Vinod asked, Hi Harsh, I have read in the news paper about homeloans rates reducing for exisiting cusomters. But I dont see any change in my EMI. should i be talking to ICICI for it.Wont it happen automatically
Harsh Roongta answers, First the change in interest rates does not necessarily change the EMI. It may change the tenure. Second some banks have fixed dates on which changes in interest rates take effect. So check your loan agreement to find out wen any changes in interest rate apply to you. Third i strongly advise you to keep a tab pro-actively on the interest rate being charged to your account as it will be in your interest.

aarruunn asked, Hi Harsh, i earn a annual gross salary of 7lacs & my wife earns 4 lacs, shd i be an primary leander & support my wife as co-applicant or shd my wife apply & include me as an co-applicant, will the amount of loan sanctioned change by the above action
Harsh Roongta answers, The loan amount will not change based on who is the first applicant or the second applicant.

Navid asked, I am a Government Employee drawing Net salary of 14000/- how much loan can i avail?
Harsh Roongta answers, assuming you are below 38 years of age around Rs. 6 -7 lacs for 20 years at interest rate of aorund 9.25%.

amitdel asked, please advice me about SBI easy home loan scheme for 30lac. 8% for 1st year and 9% fixed for 2nd & 3rd Year, and after then -2% BPLR. right now SBI BPLR is 11.75,, that means 9.75,, is this good to opt,, Uco bank is giving 8.5% upto 30lac upto 10y
Harsh Roongta answers, SBI scheme is good but some other PSU banks have better schemes. I am not fully aware of UCO bank but Canara Bank also has an excellent scheme where interest rate is 8.25 percent fixed for 1st year, 9.25 percent for next 4 years and then 2.50 percent below their BPLR (subject to a minimum of 10 percent). No processing fees and no pre-payment charges if paid from own sources. The UCO bank scheme may not be fully comparable since it may be a floating rate.

gpn asked, sir, I had taken a home loan from a nationalised bank in 2005 @ 8.75 but now all interest rates are gone up and I am paying now interest rate around 11.25 and the same loan I want to transfer to another nationalised bank where they are giving interest 8.5%. for 5 yrs for below 5 lakhs. Is that possible to transfer my loan at the lower interest and what will the bank transfer normal charges ?
Harsh Roongta answers, The 8.5 scheme was only for new loans and for transfer of loan from another bank and in any case that scheme was valid only till June 30, 2009. It is very much possible to transfer your loan to another bank (including to a PSU bank) if you always paid all your installments in time and the loan amount is not higher than 85 percent of the value of the property today and your income has remained steady or has improved. Most banks charge around 2-3 percent as prepayment charges.

Deven_2009 asked, I am staying in Society at Borivali for last 35 years and now our society had decided to go for redevelopment. I would like to get extra room, which I require Home Loan. Please inform whether I am eligiable for Home Loan.
Harsh Roongta answers, You will be able to get a loan for purchasing additional space in your to be reconstructed society. The issue that may arise is that most reconstruction projects in Mumbai are stuck and so unless your project is at an davanced stage and the lender is confident that it will actually materialise you may difficulty getting a loan.

ujjwalDas asked, Every time I have seen that nationalised banks thinks about new cutomers.But no body thinks abount Existing home loan customers. Is our RBI or FM will take any further decesion?
Harsh Roongta answers, First i think we as customers should also take action. nothing stops us from voting with our feet and shifting our loan to another lender if the lender is not giving us the rate available in the market. Having said that i think regulation is long overdue in this sector as competition has not done the trick.

vv asked, Hi Harsh, My brother is an NRI and taken a home loan for 45lacs, power of attorney is issued on my name and EMI gets deducted from my bank account and even checks were issued on my name to banker, am i eligible for tax benefit under home loan
Harsh Roongta answers, Not unless you are a co-owner and a co-borrower (both). Just being a power of attorney holder will not help you in getting the deduction.

BHARATI asked, I am bharati my mailed I am working in partnership firm getting salary of Rs.14000/- & I want to take home loan of Rs.800000/- so kindly advice me in how many years I will clear the loan, please let me know EMI
Harsh Roongta answers, assuming you are below 40 years of age you should be able to get a loan of around Rs. 5.50 to Rs. 6 lacs for a period of 20 years at an assumed interest rate of 9.25 percent.

SETHU asked, is the right time to go for housing loan, should wait for some more time
Harsh Roongta answers, Loan is only a means to an end.So the question to ask is whether it is the right time to buy a home. At Apnapaisa our answer currently is that if you are buying a house for your own use then you should not try and time the market. In any case currently the real estate prices have turned reasonable and it is still a buyers market. So negotiate hard and get a good deal on your property purchase. Do not worry even if the property prices go down a bit as this is a long term purchase and minor price fluctuations should not worry you.

manishddas asked, hello harsh pls reply.i have taken home loan of Rs. 9.7 lac fm kotak bank in year 2007. At that time interest rate was 9% floating. Now it is 12%. They are not willing to reduce the rates further. I have checked with SBI bank regarding takeover of home loan at 8%. Currently my outstanding amount is Rs. 9.3 lacs. After take over my outstanding principal amount will be Rs. 9.8 lacs. current emi is rs. 12k. Please advise if i can transfer the loan to sbi bank????????????//
Harsh Roongta answers, why not if you have paid all your installments on time. Please note that SBI rates are for 1st year only and it rises to 9 percent in 2nd and 3rd year and is floating thereafter (based on current SBAR it will be 9.75 percent from 4th year onwards). But it is far superior to what you are paying today so go for it.

Harsh Roongta says, Ok folks. Many thanks for all your questions. I hope that you were able to get the answers that you were looking for. If you still have some questions please log in to

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