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ave a query regarding your home loan? Maybe we can help. Drop us a line and our expert, Harsh Roongta, will answer it.
- Got a question for Harsh Roongta? Please write to us!
I have heard that an individual can only take a home loan twice in their lifetime. Is that so?
Also, is the tax benefit on interest payment available only to self-occupied properties? If I rent out my property, can I claim a tax benefit on interest payment and principal repayment?
- Maneesh Agarwal
You can get as many home loans as your income can justify or which you can convince the bank to give. There is no limit on the number of home loans you can take in your life time.
You can claim the tax benefits even when you rent out the property. In fact, in such a case, there is no limit on the amount of interest deduction that you can claim from the rental income.
I got a loan from HDFC [Get Quote] with a 7.25% flexible rate of interest. Original loan period was 20 years (which has now gone well over 21 years). Now I want to pre-pay some of the principal amount. After pre-paying, I have 2 options:
1. To reduce the EMI accordingly, and let the period remain same.
2. To reduce the loan term accordingly, and let the EMI remain same.
Which is a better option?
- Gaurav
This is completely a matter of personal preference.
It will depend on your monthly budgeting as well as whether or not you want to avail of the home loan benefits under Section 80C for principal repayment.
If you have already exhausted the limit of Rs 1,00,000 under Section 80C due to other investments, you can consider a lower Equated Monthly Installment.
My brother and I purchased a house. On the agreement, my brother's name is first and mine second. I will be paying the entire loan since my brother is servicing another one. Will I get the entire tax benefit?
Secondly, the original documents are now with the bank and will remain with them till the loan is repaid. Can I make changes in the agreement to make the first name mine?
- Ashwin Sahadev Jadhav
Theoretically, the position of the name on the agreement does not make a difference though in actuality it does. I suggest you consult a lawyer specailising in local property matters in this regard.
As far as tax benefits are concerned please enter into an agreement on the lines of this draft to enable you to claim the entire tax benefits on the loan repayments.
We are about to take a loan and are in a dilemma whether to opt for a fixed or floating rate of interest.
In my opinion, floating is a good option. However, most banks have been raising their rates from October 2004. Could you please advise whether the rates are likely to shown an upward trend?
- Theola Fonseca
Most consumers do not realise that this is not a one-time choice but a continuous one that they need to keep on making over the tenure of the loan. The decision should be reviewed every six months at least.
Currently, the rates are expected to move upwards and if you are a risk-averse consumer, you can go in for a fixed rate option which is about 1 to 1.25% more expensive that a comparable variable rate option.
But, as was said earlier, you need to continuously review your decision.
Got a question for Harsh Roongta? Please write to us!
Note: Questions may be edited for brevity. Due to the tremendous response, all queries will not be answered.
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Illustration: Dominic Xavier
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