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  1. Home loan: The earlier you prepay, the more you save

Home loan: The earlier you prepay, the more you save

For a second home loan the amount granted to you will depend on your monthly income along with assessment of your other financial obligations.

By: | New Delhi | Updated: March 6, 2018 2:36 AM
loan, home loan, construction, construction sector The earlier you make a prepayment, the more interest you get to save.

Can I prepay the loan in the third year as I am expecting some large amount to come to me?

– Srikant Verma

The earlier you make a prepayment, the more interest you get to save. So, if at all you want to prepay, one must try doing it in the early stages of the loan, rather than doing it towards the later end. There are no prepayment penalties, foreclosure charges or exit fees charged by financial institutions to individual borrowers.

I have an existing loan and want to buy another home with a loan. How can I check my eligibility for the second loan?

—Ashok Kumar

For a second home loan the amount granted to you will depend on your monthly income along with assessment of your other financial obligations. In case you are already paying an EMI for your first house or have other loans, the second home loan eligibility would be much lower than the first. The basic thumb rule followed considers all EMI put together would need to be 60% of your available income which will help you arrive at a home loan eligibility for the second dream home.

Five years ago I had taken a loan to construct my house. Now I want to renovate the house but the same bank is refusing to give me additional loan as I defaulted on few EMIs but paid after a year? What should I do?

—Pankaj Gupta

As mentioned by you if you had taken a construction loan five years ago and now you intend to take a renovation loan, it is possible to avail this provided your repayment track record is clear and overall market value of your property permits the facility. Further, as indicated by you, since you have defaulted on your repayments then it is a completely at the discretion of the bank, whether to extend this facility or not, based on the extent of the default. If the reason of default was genuine, would suggest you to approach the bank again with relevant proof for the reason of default, for them to reconsider their decision of assisting you with an improvement loan. You can get a loan of up to 100% of the improvement cost as certified by an engineer/ architect and duly verified by the technical officer subject to maximum 90% of the overall market value of the property, whichever is lower on loan amount up to 30 lakh. The tenure of the home improvement loan ranges from 1-10 years.

The writer is JMD and CEO, DHFL. Send your queries to fepersonalfinance@expressindia.com

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  1. Makkal Sevacentre
    Mar 6, 2018 at 7:33 am
    Everything is going well
    Reply

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