Property valuation is needed for loan to buy flat on re-sale.
by Chaitali Dutta
> How will a bank assess the market price of a flat and give loan accordingly?
– Swastik Seth
For a new flat, banks do not go for an independent valuation. Loan is granted on the value of the agreement. For a second sale, where the buyer is availing a home loan, the bank asks for property valuation certificate by their approved valuer.
> As the RBI has cut repo rate by 25 bps, should I request my NBFC to reduce the interest rate on my home loan?
Yes, if your home loan is on a floating rate, your NBFC would reduce the rate. Usually there is a time lag between the RBI cutting the rate and the banks/NBFCs passing on the benefit to their clients. You may write to them to enquire.
> I took a housing loan of Rs 25 lakh 15 years ago. As principal repayment every year through EMI, the bank has deducted only Rs 10 lakh so far. Should I pay off the entire loan in three installments over a period of two years?
Ideally, we should reduce the liability as early as possible if funds are available. A debt-free life reduces the pressure on the borrower. That said, a home loan is one of the best kinds of liability you may take on because it is a cheaper loan being asset-backed and avail of income-tax benefit on the interest paid. After 15 years, your EMI has a larger portion of principal repayment as compared to earlier years.
> I plan to buy a second home. I have about Rs 18 lakh due on my first housing loan. Should I repay the first loan and then go for the second home loan?
From the financial point of view, the rate of interest is the only element you should look at. If the old loan is cheaper, continue that. The bank will calculate your eligibility based on theoutstanding old loan. You may avail a smaller new loan to the extent of Rs 18 lakh, which will increase your margin money in the new property.
> I plan to take a personal loan of Rs 5 lakh. I expect some money towards December. Can I repay the loan then without paying any penalty?
There are no uniform rules in personal loans. Ask for the details before signing on the papers. Usually, the bank will allow the prepayment after a specific period only. Loans with a fixed rate of interest cannot be prepaid.
(The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to firstname.lastname@example.org)