I had taken a home loan of 22 lakhs in 2005 at 8% interest for 20 years and paying EMI of 19000/month. I have been claiming tax benefit on my home loan till date. Now I have an outstanding of 10 lakhs which I can pay right away and close the loan. Is it advisable to close the loan or should I continue the loan and avail tax benefit?
The decision to prepay the existing home loan is dependent on several factors. First and foremost are the income-tax benefits available on the existing loan. You should take into account the post tax returns available on alternate investment options and compare it against the post tax interest cost.
Secondly, if you are on fixed rate of interest and taken from a bank, you may have to pay a penalty of around 2% (excluding service tax) on foreclosure of loan.
Please note that before you opt to prepay your home loan, it is always advisable to pay off all other debts on which you are paying higher interest because the rate of interest on such borrowings is normally higher than home loans.
Please ensure to keep some funds available to meet any financial contingency.
I am planning to take home loan on my wife name because my Cibil record is bad…my wife is working n getting 28,000 per month salary working from last 3 yrs. Can she get a home loan alone and how much loan she will get? And how can I improve my Cibil record?
With an income of around Rs. 28,000 pm your spouse should be eligible for approx. loan amount of Rs. 12 lakhs @ 9.90% – 10.25% pa for a tenure of 20 years provided she has no other loans to service and she has a good credit history, if any.
Meanwhile, you can try and rebuilt your credit history by taking a secured credit card (secured against FD) or loan against tangible movable security such as FD / jewelry / shares / units of mutual funds / life insurance policy with high surrender value etc where the lender can give you a loan despite your adverse credit history. By being regular in the repayments of such loan, you will gradually improve your credit history. This is a slow process and it will take at least a couple of years before your credit report gets repaired enough for you to be eligible for regular loan or credit cards.
Please note that if you join as the joint applicant of the loan, the application shall be rejected on the basis of your poor repayment track record in Cibil.
As per my knowledge ,Under SBI Yuva Home Loan Scheme, only the interest applied on Home Loan is payable during the first 36 months. The regular EMIs start after completion of 36 months.
but I don’t want to pay just interest for 3 years.
My flat is getting registered in next month.Is there any clause in this scheme that if a flat is getting registered immediately then You can pay regular EMI from the very first month the loan is released(This was been told to me the bank guy).
SBI Yuva Home Loan scheme is a step up loan given by SBI to a loan consumer, based on the assumption that his salary will increase a certain percentage annually.
Under a step-up loan, the loan amount eligibility may be higher than a normal home loan due to potential of salary increase in future. The loan eligibility for this loan is calculated based on the projected/expected increase in the income in the subsequent years, rather than his existing salary.
SBI Yuva Home Loan scheme has been designed to give you higher loan eligibility as the initial outgo are lower for 3 years as this does not include any principal repayment. Off course you can prepay and there will be no charges for such prepayment.
If loan amount eligibility is not a constraint you can always go for regular home loan and start paying EMI’s. Interest rate is the same for regular SBI Home Loan and SBI Yuva Home Loan.
I am working in a MNC. As a part of CTC; company provides a facility of interest payment (partly) in case of bank loan. Few Queries:
1. Do banks provide loan for plot purchase also?
2. If yes; will this be also covered under home loan?
3. This loan will have the same rebates as applicable in income tax under home loan category?
Lenders are more selective while providing plot loans than home loans. The loans are available for a lower tenure as compared to home loan and are sometimes more expensive (upto 2% higher) than normal home loans. The plot loans are generally available only when the plot is purchased from statutory authorities or from developers who are pre-approved by the concerned lender. Even the down payment requirement is normally higher at around 30-40% for such loans.
If you are planning to construct a house on that plot of land please seek composite loan from any bank to cover the cost of the plot as well as the construction, but you will have to commence the construction within reasonable period between 1 to 2 years from purchase of the plot.
Taking a composite loan brings more benefits in terms of financing as well as tax benefits. The loan financing in case of a composite loan goes up to 80-90% of the property value as compared to the plot loan’s 60-65%. Moreover you can get the tax benefits under section 80C for the principle repayment and section 24 for the interest paid on the composite housing loan including the cost of the plot. Pure plot loans are not eligible for any tax benefits.
I am 51 year old my income Rs 50,000/month. How much home loan eligibility?
Normally lenders grant home loan up to maximum of 80% (90% for loan amount below Rs 20 lakhs) of the agreement value of the property as a home loan. You will also have to pay yourself for stamp duty and registration charges, as the banks no longer fund these charges. The overall eligibility will be based on your income, your regular outgoings and repayment track record.
Different banks presume different portion of your income as available for payment of EMI’s of loans. It varies from bank to bank and there is no standard norm/formula. But normally the bank will assume that around 40%-45% of your net salary is available for payment of EMI to serve all the loans.
Most banks have a maximum age limit of 60 years for salaried individuals since that’s the retirement age. The maximum tenure is restricted by the age of the borrower at the end of the tenure so as to ensure that the loan repayment ends on or before the retirement age.
Assuming your retirement age is 60, the maximum loan tenure available to you will be of 9 years only and you will be eligible for a home loan of approx. Rs. 16 lacs @ 10.15% – 10.25% pa.
The EMI for a 9 year loan of Rs 16 lacs @ 10.25% p.a. will be around Rs 22,750 per month.
You can take a joint loan with your earning spouse or children to increase the loan eligibility or get a loan for a longer period.
MY SCORE IS NOT BEING UPDATED SINCE LAST 9 MONTHS. I HAVE DONE SEVERAL FOLLOWUPS
BUT THERE IS NO REPLY FROM CIBIL.
(He has closed the loan from HDFC bank in March 2014 and the same has not been updated in his cibil report till now. Bank is saying that they have already sent the details to CIBIL and CIBIL is saying they have not received it yet. The dispute to CIBIL was raised in June 2014 and he has still not got any feedback after that)
This case reflects the dire need of having the banking ombudsdman cover cases regarding grievances against CIBIL as well since currently there is no grievance redressal channel regarding services from CIBIL. Your only option is to assume that it is the bank that is at fault and proceed accordingly.
Generally the repayment gets reflected on your credit report in 45 days and since neither the bank nor the CIBIL has acted on your request to rectify the report, you should file a complaint with the banking ombudsman at www.bankingombudsman.rbi.org.in
But before you do that make sure you get the latest copy of CIBIL score.