Comments on The Money Quest: Answering Readers’ Questions # 3: Home Loans Queri...

Thangavel P N, Pre-payment penalty will be as per...

2011-01-01T07:23:48.626+05:30

Thangavel P N,

Pre-payment penalty will be as per the terms and conditions mentioned in your loan agreement; just read it thoroughly.

Dear Blogger of 'The Money Quest', First ...

2010-12-31T13:42:03.907+05:30

Dear Blogger of 'The Money Quest',

First of all my sincere thanks to you for writing this blog. It really educates me a lot and helps me to lead a wealthy life.

I've a query to you regarding housing loan per-repayment of principal while the loan is in partial disburse sate (the loan amount is not fully disbursed).

In details:

- I booked a FLAT which is under construction
- For that, I opt for home loan from SBI (EASY HOME LOAN product)
- The load got sanctioned for 35L on Dec 2009 but the payout(disburse) of the loan amount is linked with the progress of the my flat.
- So for, I the bank disbursed 20L as my flat progressed
- The repayment(EMI) will start in one of the following cases which ever comes first.
1. on July 2011
2. after completion of my flat (i.e. once the full loan amount is disbursed)

- And I don't need start any repayment(pre-EMI) before the EMI commences.
- But the interest will be calculated for the partial disburse amount and it's accumulated(again, interest is applicable for the interest) in my loan account.
- From my loan account statement, I can see around 1.5L is accumulated a interest for the partial disburse.
- Meanwhile, I've saved around 5L from my salary and put it in a FD (in a different bank) where the interest rate is lower than the home loan interest.

My question here is:
Can I pay 5L towards my loan account now? (1.5L towards interest + 3.5L towards principle)
I asked the same question to my SBI bank manager, he confirmed about the interest part (1.5L) but he is not sure(he don't know the T&C) about the principle part. He recommend me to not payback the principle now but after the EMI starts.
My problem is, loosing money because of,
- the interest difference between my FD and my home loan
- and the TDS for interest earned form my FD.

And I fear, if any penalty applicable for if I prepay principle(3.5L) at this stage.

Thanks!
Thangavel P N

I have purchased a flat 1 year back, however as th...

2010-10-09T23:03:59.489+05:30

I have purchased a flat 1 year back, however as the construction & amenities provided by builder is not upto the mark so I want to sell it off & I want to purchase another flat under good construction/reputed builders construction.My housing loan tenure is 10 years.Could you please guide me what procedure/steps I will have to follow to purchase another flat by selling the current flat.
Shall I have to transffer the loan to the person to whom I will be selling?Kindly provide me the guidance

Hi, I've looked at a site which is yet to be b...

2010-09-13T11:00:24.443+05:30

Hi, I've looked at a site which is yet to be built as an apartment and will be completed in 2 years. How is the home loan provided and what will be the loan provided to me for these 2 years ? How should the registration be done incase I need to sell it off. Incase I take a loan, are there any tax benefits. If I decide to dispose / sell it off in a year after it has appreciated, then how should I go abt it and what are the rules and regulations in selling them. I particularly hear abt Capital Gains Tax. What is this ?? Please let me know the answer to this query as I'm a novice in this area and do not have much an idea.
Vivek

Sir, I have taken a housing loan from HSBC ...

2010-07-18T23:04:03.620+05:30

Sir,

I have taken a housing loan from HSBC and paying regular EMI.
In this house, I have 2 portions.
One portion is given out for rent and we live in the other portion.

If the house is given out for rent, then the entire interest amount can be claimed as deduction under "Loss from house property" (it is 1.5 Lakhs for self occupied properties).
Now, in my case (where part of the house is rented out), can I also claim entire interest for deduction?
Can you point me to the right section in the IT Law which clarifies this?

Regards,
Narendra

I have a house in City A and that is rented out( s...

2010-06-22T17:26:09.729+05:30

I have a house in City A and that is rented out( say 4500/month) and staying in another rented house( rent say 8000/month) in City A .I am working in City A and so staying also there. I have another house in City B and construction is over and that will be also given for rent .As such the completion papers are not given to Bank, the EMI has not started ,but a fixed interest is being paid to the bank now (for a period of 1 year from last Nov). I will be letting out that house also shortly (say 2500/month). What are the tax liabilities and the calculation for preparing the tax sheets for the Financial year 2010-11.
Thanks
Prakash

Hi, i'm a novice to understand Home Loan techn...

2010-05-11T02:08:50.541+05:30

Hi, i'm a novice to understand Home Loan technicalities. I've booked a flat in March'10 and the tentative delivery date is March'13. I need a home loan for about 24 lacs for 20 years. I'm planning to take it from IDBI. What are the things that i need to be aware of before setting a deal with the bank? What are the common pitfalls that a novice can ignore while signing the papers? I'll be greatfull if i can get a checklist (if possible). I can pay large sum of money (example 1 or 2 lacs) after say 5 years or 7 years. So i need that clause in the agreement also. Finally, is IDBI a good choice? If not pls suggest a good bank.

Thanks in advance
Rajan

Dear Sir, Below are details of 2 houses purcha...

2010-03-08T16:51:58.774+05:30

Dear Sir,

Below are details of 2 houses purchased by me. The post seems to be long, but..

I have purchased 2 homes in Pune and both are having loans. Both of them are completed (possession taken). In one house, my parents are staying. In 2nd home, I am staying.

1st Home details:

• It was purchased as a resale property. I am the only owner for it.

• Annual Interest paid = 45,000 Rs

• Annual Principal paid = 25,000 Rs.

2nd home details:

• It was purchased as a new property.

• I am the first owner and my wife is the co-owner. She has provided a declaration that she will not be availing any benefit. We have provided this declaration in my company.

• Annual Int. paid = 3,50,000 Rs.

• Annual Principal paid = 70,000 Rs.

Questions:

1) I would like to know whether I can claim the tax benefit on both these loans.

2) From IT tax benefit: I am planning to show the 1st home as self-occupied and 2nd home as rented even though I am staying it 2nd house with my wife. Is this possible? Is this approach correct?

If it is possible,

• I am showing 45,000 Rs. as interest (1st home) which I know falls into 1,50,000 Rs bracket but short of it. Please let me know if my understanding is correct.

• I am combining principal amount for the 2 loans (70,000 + 25,000) which gets covered under 1,00,000 investment bracket of 80 (c). Please confirm.

• Since I am showing the 2nd home as rented (let out), my calculation for income from 2nd house will be as follows:

o Annual Value (Rental Income): I have considered 15,000 as notional rent Rs per month. = 1,80,000 per year. This is a notional rent since I am not getting any actual money.

o 30% as the standard deduction: 54,000 Rs.

o Interest Payable on home loans: -3,50,000

Hence net income will be: 1,80,000 – 54,000 – 3,50,000 = -2,24,000 Rs. Is this figure correct?

If it is correct, this entire amount of 2,24,000 will be deducted from my net taxable salary?

3) Also, I am showing this entire data to my company from TDS perspective. I will not be showing this into IT returns. Do I need to show this data in IT returns as well?

Thanks and Regards,
Suhas

request you to clarify two point: My wife and I wi...

2009-12-25T15:20:52.631+05:30

request you to clarify two point: My wife and I will be buying a second house and we both will be co-borrowers and co-owners. If only I avail the tax benefits, how do I calculate my share in the joint house property for claiming tax benefits (interest part)? We have a joint bank account and the EMI will be paid from this account.
She is a single borrower and owner of our first house (where we currently stay). Can she avail tax benefits towards interest repayment for the second house as well? We will be letting out our second house. Thanks

While you can claim the section 80C deduction for ...

2009-12-24T21:25:42.305+05:30

While you can claim the section 80C deduction for the entire principal repayment, the deduction u/s 24(b) for interest paid will be allowed in proportion to your share in the joint house property.

My wife has availed a housing loan in her name and...

2009-12-24T19:11:28.187+05:30

My wife has availed a housing loan in her name and the property is also in her name. She is availing tax benefits. We intend buying another house and we both will be the applicants and co-owners. If only I avail the tax benefits for the second house, will I be eligible for FULL tax benefits both for principal and interest repayment?

I have been paying a current EMI of 25000 for my h...

2009-12-19T13:46:25.660+05:30

I have been paying a current EMI of 25000 for my home loan for the last 2 years. Now I can affort to shell out anoth 5000 per month for this loan. There are 2 options
1. Increase my Monthly EMI to 30,000 [OR]
2. Every month do a part prepayment of 5000 (towards outstanding principal).

Can someone suggest which of the above option is cost effective ?