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Confused about your home loan rates? Here's help

June 22, 2009 13:11 IST
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Have a query regarding your home loan? Maybe we can help.

Drop us a line and our expert, Harsh Roongta, will answer it.

Got a question for Harsh Roongta? Please write to us at getahead@rediff.co.in with the subject line 'Home loan query for Harsh Roongta'.

I have the following loan with ICICI Bank:
Loan amount: Rs 35,75000
Interest rate: 12 per cent floating
Tenure: 170 months
EMI: Rs 42,770
I want to switch over to other banks that can offer cheaper interest. Please advice which bank should I opt for?

C Balasubramanian

Since your bank is not giving you the market rate, you should explore the option of changing your home loan lender if you have maintained a good track record of repayment on the loan. In such a case you will typically get a rate of around 9.5 to 10.5 per cent. You should check the 'Should I switch my loan' (http://www.apnaloan.com/admin/openwysiwyg/loan-advice-india/switch-my-loan.html) calculator on www.Apnapaisa.com to check whether it makes sense to change your lender.

You may want to consider the prepayment charges payable to the existing lender and the processing fee to the new lender. You can check the home loan comparator (http://www.apnaloan.com/home-loan-india/compare.html) to compare offers.

I have purchased a house in Pune in Ravet locality, which comes under Pimpri-Chichwad area for approximately Rs 20 lakh. I have paid around Rs 14.5 lakh in cash and the remaining amount I am planning to take a loan. Which bank would you recommend if I were taking a loan for 15years? I have checked with IDBI Bank as it has reducing amount system, that is, if I get some cash in between and if I pay the EMI and the interest will be on the remaining amount. Secondly will I be able to get some appreciation in 5 years course of time.

Manish Doshi

You can get a home loan based on your income. You can get up to 3.5 times your annual gross income as a home loan for 20 years at current rate of interest.

Most banks have daily, monthly or annually reducing balances. You can make partial prepayment towards your home loan based on the availability of surplus cash. The amount will be adjusted against the outstanding principal.

It is not possible for us to comment on scope for appreciation in specific localities but in general residential real estate is a good investment over a longer period of time such as 5 to 10 years.

I am planning to purchase two room set in Haridwar costing around Rs 21 lakh + registration cost. I am working in private organisation, are planning to take home loan of Rs 10 lakh. My monthly income is Rs 25,000 and I pay Rs 4,500/month as rent. Please suggest if I should purchase this unit or stay on rent.

Neeraj Sharma

Typically if you have made up your mind to stay in Haridwar for the medium term, you should definitely look to buy a flat to stay in. In the Indian context it may not be very useful to do a rent v/s buy decision given the complete uncertainty on what the rentals will be in the medium term.

Home loan comparatorI have a house at West Bengal around which exists some portion of land. I want to make additional structures there like rooms and stair. I have to sanction a plan for that from the City Corporation. Can I get home loan for that?

Rupnarayan Sett

Yes, you can get a construction/renovation loan based on your income and the title of the property. It is important that you have plan sanctions from the relevant authority to the seller as also processing fee to be paid by you.

I have purchased a house in Greenfields Colony, on sale agreement, that is, under GPA, General Power of Attorney, since the house HUDA closed registration at that time. We are now paying the loan taken by the seller. He took a loan of Rs 11 lakh and has finished paying the interest on that amount, whereas the principal amount is still left to pay off. So, after the sale deed, we are paying the home loan installments. But the loan is still on the seller's name. Now, HUDA has opened the registry. So, My question is that whether the loan can be transferred in my name and also which bank can allow this internal transfer? Currently, the loan is from ICICI Bank. How can we take out the registry from HUDA?

Sangeeta Nair
 
The loan cannot be transferred internally. The existing home loan will have to be closed and you will have to take a fresh loan in your name, based on your income. Prepayment charges will be applicable.

I took home loan of Rs 11 lakh from HDFC Bank Ltd. in April 2008. My salary is Rs 5.1 lakh per year. My present balanced loan amount is Rs 1 lakh. Should I transfer my loan to SBI?

Mandar

If HDFC Bank is not giving you the market rate, you should explore the option of changing your home loan lender to SBI (or any other bank) if you have maintained a good track record of repayment on the loan. You should check the 'Should I switch my loan' calculator on Apnaloan.com to check whether it makes sense to change the lender.

You may want to consider the prepayment charges payable to the existing lender and the processing fee to the new lender. You can check the home loan
comparator to compare offers.

I want to know, how can they do this with us (Old customers)? If I am not getting the benefit of market scenario, then what is the meaning of floating rates? At the time of increasing rates they (my bank) used floating rates rule but while decreasing it, they are not using it. Sir, I am fully confused about the rules and regulations of floating rates. Kindly clarify.
 
Sunil

A floating interest rate can be reset periodically based on the revision of a bank's prime lending rate, which is linked to market conditions. The periodicity of such revisions is defined in the loan document where they change the reference. If they are not giving you the market rate, you should explore the option of changing your home loan lender if you have maintained a good track record of repayment on the loan.

You should check the 'Should I switch my loan' (http://www.apnaloan.com/admin/openwysiwyg/loan-advice-india/switch-my-loan.html) calculator on Apnaloan.com to check whether it makes sense to change the lender. You may want to consider the prepayment charges payable to the existing lender and the processing fee to the new lender. You can check the home loan comparator (http://www.apnaloan.com/home-loan-india/compare.html">http://www.apnaloan.com/home-loan-india/compare.html) to compare offers.

Dear Harsh
 
I have gone through the article on rediff and offer my sincere regards for such a nice article.  I have a doubt in my mind for which I am writing to you. I am working in Mumbai belonging from Assam. I am planning to buy a property in Guwahati, Assam. But not clear about the following questions:
 
1.  Can I have a joint loan for property and house construction?
2. Can my father, who has 3 years of Govt service, be a co-applicant?
3. Can I avail tax deduction for home loan as well as HRA, as I am staying in Mumbai?\
4. Which bank will be favourable for home loan?

Pankaj Borah

Yes, you can take a loan to buy a non-agricultural plot as well as a construction loan based on your income.

You father can be a loan co-borrower based on his income and age of retirement. However, since he has three years of service left, it may not make a significant impact on your home loan eligibility.

Contrary to popular opinion, there is no restriction under the I-Tax Act with respect to claims for both. The exemption of HRA is covered under Section 10 (13A). In fact, Section 23(4) clearly recognises the fact that more than one house/property can be occupied and used by the assessee at the same time for the purposes of his own residence.

You can claim tax deduction benefit on home loan for an under-construction property only from the financial year in which the construction is completed.

There is nothing like a best bank. Banks will offer interest rates based on customer profile and loan requirement.

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