Not happy with your home loan lender?

I am working in a private engineering college. I am getting 24,000 per month. Please inform me how much amount I can avail as home loan?

Santosh Vishwakarma

Harsh: Based on the information provided by you, if calculated at an interest rate of 9 per cent for 240 months, you can get up to Rs 9-13 lakh as home loan. Check the home loan eligibility calculator (link: http://www.apnaloan.com/loan-advice-india/home-loan-eligibility.html). Check the home loan comparator (link: http://www.apnaloan.com/home-loan-india/compare.html) for offers from various banks.

I am planning to buy an Apartment in Hyderabad at the cost of 20 - 25 Lakhs. I would like to know the home loan interest and EMI per month and amount per Lakh from reputed banks. Also would like to know my loan elgibilty (Max). My Salary is around 5 Lakhs per annum. Could you please kindly let me know the above details asap.

Kalyan

Harsh: Based on the information provided by you, if calculated at an interest rate of 9 per cent for 240 months, you can get up to Rs 16-23 lakh as a home loan. If you take a loan of Rs. 23 lakh for the same tenure and at the same interest rate mentioned above, the EMI will be Rs 20, 693. 

I have been reading about your articles and views for quite some time and wish to put my query as under:

I took a loan of Rs. 6,60,000/- for a built up house from a private Home Finance company in August 2005 for a period of 10 years at floating rate of interest of 7.75 per cent. Throughout the years 2007 and 2008, the company raised the interest rate and as on date it stands at 12.75 per cent. Despite the relaxations announced by the RBI during the last six months, the company is not willing to cut down the interest and as it has been in the Press also, banks are providing the benefit of lower interest rate only to new customers and not to the existing customers. Of late, the company has conveyed that it is likely that the interest rate may be reduced to 12.25 per cent, ie reduced by 0.5 per cent. I am unable to gauge if the rates for existing customers are to come down. In such a scenario, do you suggest my switching the loan to another bank and take the benefit of lower rate of interest as a new customer. I still owe the company approximately Rs. 4,90,000. I did not agree for my tenure to be extended and instead at every jump, had my EMI increased. Would be grateful if you could provide to me your expert advice?

Vinod Kumar

Harsh: If your lender 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. 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.

This is Rajesh here and I have got 2 queries;

1) I have an existing loan for a flat in Mumbai, but now that I will be shifting base to Bangalore, I am intending to take another home loan to buy a house in Bangalore. What are the tax implications for Loan and Principal amount?

2) If in case I do not go for a loan but simply go for a rented place then what are the tax implications.

Harsh: You can claim tax deductions on home loan for more than one property. Click here for a detailed response: http://www.apnaloan.com/home-loan-india/deductiononmorethanoneproperty.html.

In case you stay in a rented flat in Banglore, you can claim HRA exemption if the flat is rented in your name. Tax deduction benefits on home loan and HRA exemption is de-linked and you can claim both.

I am salaried employee from an MNC company based at Hyderabad and getting net salary around 25,700/month. I would like to purchase a flat costing around 25 lakhs in Hyderabad. What would be the best method I can follow regarding Home loan.

Harsh: You can get up to 3.5 to 4 times your annual gross salary and up to 85 per cent of the cost of property as a home loan. Based on the information provided by you, you can get Rs 11-15 lakh as a home loan if calculated at an interest rate of 9 per cent for 240 months. You can approach a lender for a home loan.

We have invested with one of the builders- we had a tripartite agreement between bank, builder and us. As per the agreement, we were supposed to pay 10 per cent of the margin money and the bank to the builder would fund the rest. As per the agreement and condition builder was supposed to hand over the possession within 18 month and Bank would start EMI for same post stipulated months. But, liability would lie with the builder in case he fails to give possession within 18 months and till the time he provides possession.

Now it's almost 30 months and we have not received possession. After 18th month bank started the EMI, the builder requested us to pay principal and said he would pick up the interest component. This arrangement went for 5 months and one fine day the builder stopped paying interest, citing of financial slow down, and in turn requested us to pay the complete EMI.

We agreed for that in principle, provided we have another agreement with the bank and builder with new term and condition. We are reluctant to have any contract with builder alone, superseding the original contract. Reason for this, we don't have any confidence by when the project would be completed and are we risking the money.

We have written to the bank of the same -- but have not heard of anything from them. Please advise us, what are the legal complications that may arise? If the builder is not able to provide the possession, who is liable to pay the bank money? Also, are there any recourses of getting our 10 per cent money bank from builder? I am not sure whether the builder is paying interest to bank and what options bank has in such a situation where builder is not paying interest to bank.

Harsh: Your tripartite agreement will need to be studied to provide an accurate answer to this. However, typically, most such agreements provide that the liability of the consumer to pay the bank is irrespective of the delivery on time by the builder. Check your own agreement and confirm. 

I have availed a loan in Feb 2005, from HSBC bank on floating rate. All other banks have reduced the rate, but HSBC is not reducing the Float EMI rate I have checked with other banks also. Interest rate is 13.25 per cent. I have check with other banks also about transferring the loan, but still got no fruitful information/answer.

Sambhaji

Harsh: Not sure what to answer because the loan transfer answer does not fit the question and prepayment cannot be mentioned as availability of surplus funds not indicated.

As far as I know the benefit from paying interest on home loan is available through Section 24 (Income/loss from House property). Now I have a question. I have a self-occupied property (an apartment). I am paying roughly 80,000 per annum as Interest on Loan from HDFC and I am also paying Municipal tax 4000 per annum. How should I calculate loss from house property in this case?

Asit Saha

Harsh: Loss of Rs 80, 000 per annum. In case of self-occupied property, the deduction for municipal taxes is not available.

I have taken the loan from LIC Housing Finance Ltd. for Rs.12 lacs for 20 years on FLOATING interest @11 per cent in October 2008 and installments deducted from 5.10.2008, first installment had deducted of Rs.452/- and then Rs.12,384/- per month regularly.

Sir after a few months the Govt of India decided to reduce the rate of interest on Home loans. But Sir, right now I am paying the installment @11.25 per cent interest. How can I check that LIC Housing Finance Ltd. will take the rate of interest on my HOME LOAN correctly because on 26.3.09 rediff.com website has given APNA LOAN survey/comparative chart of Home loan and rate of interest charged for all private banks and nationalised banks but not given about LIC Housing Finance Ltd. which I think also a Govt.Finance company.

Please give me guidelines how can I check that LIC Housing Finance Ltd. is charging the rate of interest on my HOME LOAN correctly and if they charged wrong rate of interest to whom or which person I have/agency I have to contact regarding rate of interest. Your valuable/golden reply/answer/guidelines in this regard will be highly appreciated.

Ashu Jain

Details of LIC Housing Finance Ltd. is available on the website, but it is for new customers. Check the link: http://www.apnaloan.com/home-loan-india/compare.html. Since you have taken a home loan at a floating rate of interest, it is anyways subject to change. 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 can also 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.

Please inform the tax related provisions in respect of home loan prepayment: Home loan taken in Oct 1999 & repaid in Oct 2008. Tax related provision in respect of capital gains, what is the last date for depositing the amount I capital gains account.

Kulkarni

No capital gains tax arises on prepayment of home loan. It only arises when the flat is sold.

I purchased one 2BHK flat on DP in Ahmedabad. Now I want to take house loan on that, give me your suggestions. I will prefer nationalised banks but they are taking two to three month time, what do I do?

Jignesh Dhanani

Harsh: There is no distinction between taking a loan from a private or a nationalised bank. You can opt for a bank that is suitable for your income profile and meets your loan requirements. Besides checking the interest rate, you also need to check other aspects such as processing fee, prepayment charge and clauses etc.
 
I am residing at Aurangabad (M.S) & working in private sector. My take home salary is 16K per month. I am trying to buy a flat on loan. In this regard I contacted many builders of this area. But the flat I chose of a reputed builder conditioned that the total amount to be paid within 1.5 to 2 months but possession of that flat will only be possible after 1 year. I am little confused in this case. As I calculated I have to pay 1 Lakh more within that period w/o occupying the flat. Plz suggest; whether I'll go ahead with that builder or ignore.

Subrat Kumar Dash

Harsh: You will be liable to continue paying the EMI as the bank does not take the responsibility of any delay on the part of the builder. In the event you make delays in repayment, you will be a defaulter. This will impact your ability to get a loan or a credit card in future.

I have taken a home loan from ICICI, in my name in Delhi. The flat is given on rent and I stay in company provided accommodation. I and my wife work in govt sector. Because of the rent, I am not able to get any benefit due to the interest on housing loan since my rent is more than the EMI. Can I gift this money to my mother or father as they have no source of income and still claim the interest rebate on loan? Or is there any other way to claim rebate on interest part of the housing loan.

Vikram Chandra

Harsh: You cannot transfer an income from an asset without transferring the asset itself. So, what you prefer does not look possible.

I am a senior executive in a Defense Public Sector Unit. My present total salary is Rs.72,000 p.m. excluding perks and I shall be retiring on 31st Dec. 2012. I wish to avail a loan of Rs. Ten Lakhs for constructing a house on plot of 216 sq. yards, which I had purchased long back. My question is as under: can I get a home loan of Rs. Ten Lakhs for ten years, if not ten years than for what duration?

Harsh: You can get a home loan for a maximum tenure of 3 years, ie up to the age of retirement. If you have children/spouse with stable source of income, you can take a joint loan with them to enhance loan eligibility. If you are entitled to a pension, then lenders like HDFC Ltd. have a step down plan that you may be eligible for.

Will it be more beneficial to spend Rs Ten lakhs out of my CPF and put the EMI equivalent amount in my CPF every month till my retirement ie 31st Dec.2012?

AK Bhatnagar

Harsh: It is an excellent idea but check CPF regulations.

I have been reading of reducing lending rates as inflation has reduced nearly to zero, but not finding implementation of the same. Banks increase the lending rate as soon inflation moves upwards but with the same speed banks won't reduce the lending when inflation drops. There is huge difference between current inflation compared with that Dec 2007. Banks consider other factors along with inflation when comes to reducing the lending rate but not while increasing lending rate. When can we expect RBI regulating the lending rates to make things transparent?

I observed two people have queried about increase of interest rate by banks (when inflation goes upwards) and their reluctance to decrease when market conditions are favorable for low interest. You have answered them by saying banks are reducing lending rates. Let me be very frank on this issue. We say our fundamentals are strong and RBI has good regulations to control the irregularities. I agree to some extent and in few cases when compared to their peers in western countries. But when we look at our banks which are governed by RBI, they simply increase the rate of interest when inflation has just moves upwards (and even do not bother to inform the customers). The same approach or aggressiveness is not found when inflation moves southwards. They just give some vague reasons there are other factors that will decide the rate of interest. These so called other factors do not come into picture when inflation/interest is moving upwards. Now the question comes whether we have strong regulatory body to control such imbalance act. Or is these regulations meant for banks to get profit.
 
Rajesh

Harsh: Yes, there need to be a certain set of regulations with respect to interest rates decicded by banks. However, the best option in the current scenario is to explore the option of shifting your lender if your current lender is not offering the market rate. That is, if you have maintained a good track record of repayment on the loan.