Do you have surplus every month after income tax, family expenses and existing EMI payment? Typically, it will consider a quantum of loan where the EMI is 50% of the monthly net on hand after income tax and existing EMI.
By Chaitali Dutta
Q1. I have Rs 5 lakh spare with me. I have two ongoing loans — a car loan of Rs 8 lakh and house loan of Rs 15 lakh. Which one should I prepay with the spare cash? —Ritesh Arora
I would suggest you pay off the car loan first with extra cash. There are three reasons for it. Firstly, the car loan would be at a higher rate of interest than the home loan, therefore you save more by paying the more expensive loan. Secondly, there is no income tax benefit of 80C and Section 24, for the car loan. Thirdly, a car is definitely a depreciating asset whereas generally a house is an appreciating asset.
Q2. I am planning to buy a small property in Goa. I already have a flat in Mumbai for which I am paying EMI. Will a bank give me loan? —C S Gopal
Second home loan is possible. A bank will look at your repaying capacity. Do you have surplus every month after income tax, family expenses and existing EMI payment? Typically, it will consider a quantum of loan where the EMI is 50% of the monthly net on hand after income tax and existing EMI.
Q3. As I have few months left for my home loan, what papers should I collect from the bank? —J K Pandit
Please collect all the original receipts (paid to builder/seller), loan closure (no dues) letter, the interest certificate for the running FY along with your original sale agreement. In case your property is in a Housing Co-operative Society, please ask your bank to issue a letter for vacating the lien marked on your flat.
Q4. Is there any penalty clause for prepayment of education loan? —Manoj Singh
Usually, there is no prepayment penalty on education loan after the expiry of 6-12 months of the loan. This period may differ for different lenders. Please check with your loan provider on the specifics.
Q5. My wife and her sister have a joint property from their parents. Can she buy it from her sister and will a bank give her loan as she is working in Dubai? —Mohit Kumar
Yes, it is possible. However, first the conveyance has to happen in joint sisters’ names. Next a partition deed needs to be done. After the partition deed, either of the parties may sell their portion. This is valid if it is possible to do a demarcation of the property. NRIs are very much eligible for bank loans.
The writer is founder, AZUKE Personal Finance Advisory (ww.azukefinance.com)