Got a question for Harsh Roongta? Please write to us at getahead@rediff.co.in.

Dear sir Can you please tell me if the (interest + principal) amount that you pay towards your home loan in a year is dependant on the amount of loan that the bank has actually disbursed to the builder for that year (or) is the amount repaid towards the actual loan amount sanctioned regardless of the amount disbursed?

Loan amount sanctioned is Rs 20 lakh. However as per the builder's plan the bank only needs to pay Rs 10 lakh (depending on the extent of construction completed) in the first year from start of construction. So would I be paying EMI * 12 in the first year be on Rs 20 lakh or would it be on Rs 10 lakh? Kindly clarify.

Venkat

The (interest + principal) amount that you pay towards your home loan in a year is dependant on the amount of loan that the bank has actually disbursed. When there is only partial disbursement, it is usual for the lender to charge only the interest amount (called pre-EMI) till the entire disbursement is made.

Some lenders may start off the EMI on each disbursement made. Obviously, in both the cases, (whether you are paying EMI or pre-EMI) the payment amount is dependant only on the actual disbursement and on the sanctioned loan amount.

Whether you are paying the pre-EMI or the EMI, you can get tax deduction benefits for the home loan for an under-construction property only from the financial year in which the construction is completed.

Sir, I am a central government employee and have availed a home loan of Rs 6.25 lakh for extension of the house owned by my father (retired govt. servant) for my self occupation. I am staying on the ground floor of the house. The loan was availed from LICHFL, my father being the main applicant and I as co-applicant.

The loan was disbursed in my name (co-applicant). I am repaying the loan amount by monthly installments through ECS from my salary account.

Now I would like to know whether I can avail the following against the repayment of the above loan.

Since repayment is from my salary, can I avail income tax exemption, if so under which sections?

Any case study or any written act is available in income tax ready reckoner etc.

Any other information regarding the above request?

Thanking you,

Srinivasa Prasad Gummalla

To be able to claim tax deduction benefits on the renovation loan, you have to be a co-owner to the said property as well as a co-borrower to the loan. Since you are not a co-owner, you will not be eligible for any tax benefits in respect of the loan installments repaid on such a loan. You could explore the option of becoming a co-owner by virtue of a gift deed or sale deed both of which will entail payment of stamp duty. Only after you become a co-owner, will you be able to claim the tax benefits.

Hello Sir, I have one question on switchover the housing loan to new bank.

Currently I have taken housing loan of 27 lacks from Kotak Mahindra 2 years ago with floating interest and now the interest rate is too high which 14.5%. This is the only bank charging this much interest rate and I don't want to continue with this bank. I know I need to pay pre-closing penalty of 2%.

So, now I want to changeover this loan to SBI which is offering 10.25%.

Please advise is this a right step.

Also, my annual salary is 12.5 lacks and I am not sure whether SBI will approve loan of 25 lacks. Do I need to pay any partial payment to SBI also or will they take over the entire loan amount left balance at Kotak Mahindra. Just to mention our company ROBERT BOSCH has got employee salary accounts with SBI.

Please advise. Regards, Srinath

Based on the salary details provided by you, the new potential lender, State Bank of India (SBI) should have no problem in taking over your existing loan from Kotak Mahindra provided your repayment track record has been excellent. You should consider other lenders before you decide to switch your lender.

Hi, Could you please enlighten us on the process/requirement for a bank to make changes (especially downward) to a floating home loan rate. I have an HDFC Floating rate loan taken in 2007 Aug, and till now while they have increased it two times, from 11% to 12%, they haven't reduced it after recent RBI rate cuts. They claim that they plan to reduce it to 11.5% in March. Is this behaviour correct? Is there a legal ground to approach them to reduce the rate?

Thanks, Ravi

There is no specific regulation that governs the interest rate charged by the banks. RBI only requires the concerned bank to have the maximum interest rate charged by it to be approved by the bank's own board of directors. If you think that the actual interest rate was not divulged to you properly, then you can approach the Banking Ombudsman. Details are available on www.bankingombudsman.rbi.org.in.

In event your current lender does not pass on the benefit of lower rates, you can also approach another lender offering a lower rate. You may want to consider the prepayment charges payable to the existing lender and the processing fee to the new lender.

Dear Sir, I have taken a home loan of amount Rs.2400000 from Kotak Mahindra Bank on Nov.2007. I am paying regular EMI and also paid part payment of Rs.200000 and as on today the home loan amount is Rs.20,00000.

The current Rate of interest is 12 % (floating) which is much higher than from any nationalized bank which is 10 to 10.25 per cent for the period of 10-15 yrs. I would like to transfer this loan to either Maharashtra Bank or SBI. Is it a wise decision or any other alternative option is available? Appreciate your help on this.

Anil Kumne

You can transfer your home loan from Kotak Mahindra Bank to either Maharashtra Bank or SBI or any other lender. You may want to consider the prepayment penalty payable to the existing lender and the processing fee to the new lender. You can check the 'Should I transfer my loan calculator' to calculate whether it makes sense to transfer the loan.

Harsh Roongta is CEO apnaloan.com, a guide to home loans in India. Apnaloan also enables consumers get best home loan rates by making banks compete for their loan.