Your Queries – Loans: No pre-payment penalty on top-up housing loan but do check sanction letter clauses

The documents—proof of ownership of land, an estimate of the cost of construction by an authorised architect, both your income proofs and ability to repay—has to be established.

For the vehicle loan, the borrower has to show the ability to repay by way of income proof. This is typically done by way of the last three years' income tax returns for non-salaried income.
For the vehicle loan, the borrower has to show the ability to repay by way of income proof. This is typically done by way of the last three years' income tax returns for non-salaried income.

By Chaitali Dutta

Is there any prepayment penalty for top-up housing loan?
—Arvind Kumar Jain

No, there is no prepayment penalty on the top-up housing loan, provided there is no clause to the contrary in the arrangement letter. Check the details in the loan sanction letter.

I have a family floater mediclaim policy (Me, wife and son). Son is now 25years and this year he enrolled as a full-time MBA student. Can I continue with the cover for him?
—Haresh Saraiya

There is no industry standard here. Usually, in a floater plan, the child is covered up to the age of 18 years/ 21 years/ 25 years. Your son has to opt for an individual plan now.

As my brother and I want to build a home, what are the documents that we will need for the bank loan?
—Raghav Singh

Siblings may jointly apply for such a loan. The documents—proof of ownership of land, an estimate of the cost of construction by an authorised architect, both your income proofs and ability to repay—has to be established.

What is the procedure followed by a bank to assess the market price of a flat and give a loan accordingly?
—S Gururaj
For a new flat, banks do not go for an independent valuation. Loan is granted on the value of the sale agreement. For a second sale, where the buyer is availing a home loan, the bank asks for property valuation certificate by approved valuer.

I have paid EMI for 15 years and now have money. Should I pay off the entire loan in three installments over a period of two years?
P S Surya
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 you can also 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.

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

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