Loans: Don’t wait for SC verdict, pay off moratorium dues as soon as you can

October 20, 2020 1:00 AM

Irrespective of the verdict from the Supreme Court, from the financial cost point of view, it would be better to pay off the full/part of the EMIs overdue.

The principal is anyways payable by you, so go ahead with as much as you can pay.The principal is anyways payable by you, so go ahead with as much as you can pay.

By Chaitali Dutta

I applied for six months moratorium for my home loan. Since I have got some money now, should I pay off the accumulated interest or wait for the Supreme Court’s verdict?
—B R Joshi
Irrespective of the verdict from the Supreme Court, from the financial cost point of view, it would be better to pay off the full/part of the EMIs overdue. The Supreme Court will decide only on the interest component, whereas your EMI has both principal as well as interest. The principal is anyways payable by you, so go ahead with as much as you can pay.

My brother-in-law expired three years ago and now my sister is finding it difficult to pay off the home loan. Can I transfer the loan to myself and pay the EMI. My sister can make me the joint owner of the property.
—Venkatesh Thomas
It is unfortunate that the bank did not insist on a life cover equivalent to the loan amount for your brother-in-law. A joint ownership with you will not be possible. The only way out would be an outright sale deed to you where you become the sole owner of the property. The ownership will come with the liability as well.

I got Rs 80 lakh on selling a property. I have a Rs 60-lakh loan on another property. Should I invest the sale proceeds in Section 54 bonds or pay off the loan?
—Navneet Thukral
You get long-term capital gains tax exemption if the gains are invested in Section 54 bonds. So you won’t invest entire sale proceeds in these bonds. I suggest purchasing the bonds with the indexed cost gains and the remaining used to pay off the Rs 60-lakh loan.

I want to buy a flat and put it on rent. As I am 50 years old and my wife 43, can we get a 15-year loan for Rs 70 lakh? How much would the EMI be?
—Arun Singh
Rental yield is in the region of 2% per annum. Interest rate on loan will be around 7% per annum. So, outgo from your pocket will be around 5%. If we factor in benefit under Section 24, then the rate is further reduced. For loan tenure, the FI/bank will match it with your retirement age. For a 15-year loan of Rs 70 lakh, EMI will be about Rs 63,000. If you look at 10-year loan, the EMI shoots up to Rs 81,000.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance. com). Send your queries to fepersonalfinance@expressindia.com

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