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I have a maxgain housing loan from SBI. I have been sanctioned a Rs 20 lakh loan towards the housing construction. I have utilised upto Rs 15 lakh so far and am yet to take the last installment. I did not utilise moratorium period of 9 months and started my EMI from the first month of loan sanction.

Now my concern is, I want to pay not more than Rs 10,000 towards EMI every month and I don't mind parking excess funds into the loan account (this particular loan has this feature).

Can you please give me simple math as to how I can plan for this?

Best Regards,
Saila

Please check the given link for your answer:
http://www.apnaloan.com/home-loan-india/homesavers.html.

Suppose I have rented my property (for say Rs 5,000) to someone and hence my income from other sources becomes Rs 60,000 annually. I am told in that case, there is no limit to tax benefit on interest. And it can be more than Rs 1.5 lakh as well. Is it true?

Thanks
Hemant Chanchlanid

Yes, if the property is bought by taking a loan and has been rented, there is no cap on the tax benefit for the interest portion of the loan, ie it can be more than Rs 1.5 lakh. Incidentally, the income/ loss are calculated under the head 'Income from house property' and not 'Income from other sources'.

I have taken a home loan from Reliance Capital for Rs 14 lakh in the month of May with a tenure of 240 months, interest type floating and with a rate of interest (pa) at 11 percent.

The EMI of the same was coming to Rs 14,451.

In November, they had sent me a letter saying that prime lending rate has increased and the revised rate of interest (pa) from now on would be at 12.75 percent with 296 months tenure.

The revised EMI comes to Rs 15,524.

My query is as below:

When the interest type is floating, the rate of interest should be varying as per market conditions.

They have increased the interest rate when the PLR has increased.

Likewise, shouldn't they decrease the rate of interest when the PLR has come down now?

Isn't Reliance Capital being too mean in doing this to me?

Can I find a way out of this?

AV Vivian Kumar

The lenders link their floating rate to an internal rate. This internal rate can be called anything. Most lenders call it the prime lending rate, some call it floating reference rate etc. This is an internal rate declared by the lender, the fixation of which is not at all transparent. You are right in your impression that most lenders are quick to increase this internal rate when internal rates in the market are increasing, but are much more slow when market interest rates are decreasing.

While banks may increase the EMI with increase in its benchmark rates, this does not necessarily translate into decrease in interest rates with downward movement of PLR.

Since you have taken a home loan at a floating rate of interest, it is anyway 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.

Tax calculation can change the view on pre-payment. You can also check the Should I transfer 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 bought a property in 2006 in joint names with my mom. She is also the co-applicant with me in the home loan (she is however a house-wife). Now I am married and my wife wants to claims the tax benefits from this home loan.

I have a few questions:

1. Can my wife be added as 2nd co-applicant or I shall have to retire my mom as co-applicant and then add my wife?

2. Can we both claim tax benefits on the home loan if my wife becomes co-applicant or second co-applicant? What ratio?

3. If my wife becomes a co-applicant, will she not be allowed to take another home loan in future as main applicant?

4. If I have to remove my mom as co-applicant, then do I have to make amendments in the actual agreement and pay the stamp duty and registration again?

1. You can add your wife's name as the co-applicant of the loan, along with your mother.

2. If your wife is not a co-owner to the said property, she will not be able to claim tax deduction benefits on the loan. Adding her name as a co-owner to the said property will have stamp-duty implications.

3. Your wife, in spite of being a loan co-borrower to the loan and/or co-owner to a jointly owned property, can get a loan to buy another property based on her repayment track record and her income.

4. Yes. This will also entail a fresh loan application to consider your eligibility based o the joint incomes of your spouse and yourself.

Lastly, is it advisable to convert your home loan because you are paying higher interest rate?

Example: ICICI has come up with a scheme till March 31. My current floating rate interest rate is 12.75 percent, since I said I want to transfer it to public sector bank, they have given me the option of reducing the interest rate to 9.75 percent, provided I pay:

Interest for 1 month (due to the delay that will be caused to collect EMI)
+ 0.55 percent of the outstanding amount (conversion fee)
+ 0.1 percent of the outstanding amount (franking)
+ Rs 100 franking

Is it a viable option in the current market condition?

My loan amount is Rs 16,00,000.

Please advice. Thanks a lot.

Since you have taken a home loan at a floating rate of interest, it is anyway 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.

Tax calculation can change the view on pre-payment. You can also check the Should I transfer my loan calculator on Apnaloan.com to check whether it makes sense to change the lender.

You should be able to get a better deal than the 9.75 percent, which is on offer. However, please understand it will require a good amount of administrative work. If you are not in a position to devote that, then you should definitely go for the option.

Our employee purchased a house through a housing loan and the same has been given let out from July 2009 for Rs 15,000 per month. The EMI paid is around Rs 80,000 per month with interest approximately Rs 75,000. He has given a declaration towards rental income and interest on loan and principle payment. Since he is paying such a huge interest, he is asking us to adjust TDS salary to that extent.

Can we consider this against salary income and please advice whether we can adjust against income from house property? Can we claim principle repayment under Section 80C?

Please advice. Best regards,
Thippeswamy Kori

Yes, you have no other option. Please read Section 192 (2B).

Harsh Roongta is CEO apnaloan.com, a price comparison site that allows consumers in India the ability to compare the EMI, interest rates and other fees for home loans, car loans, personal loans, business loans and credit cards.