If I already have one home loan and take a second one, can I get tax benefit on both loans?
Yes, you can get tax deduction benefits on more than one home loan taken in one financial year to buy a property. However, you will have to pay tax on the “notional rent” on at least one of the houses. Notional rent is the rent you would have got had you given the house on rent. As the owner of two houses, you can choose one house to be the “self-occupied property” and the other will be taxed on the basis of its notional rent.
There is no limit for deduction of interest payable on the loan taken to acquire the property, which is treated as “notionally on rent”. You can also change your choice from year to year.
My father is retired. He is 61. He has an outstanding home loan amount of around Rs7 lakh. His EMI is Rs10,000 per month and the remaining period of the loan is around eight years. This amount is a real dent on his pension and income and he doesn’t have a life insurance policy. Is reverse mortgage suitable in this case or are there other options available?
—ROHIT P. KARHADKAR
Presuming that your father is actually occupying the property himself, he should be able to get a reverse mortgage loan. Public sector banks (PSUs) are active in the market but they also may not be keen to pay a lump sum amount immediately (which is required to pay off the existing loan) even though the scheme officially provides for it. You can try more active PSU banks such as State Bank of India, Punjab National Bank, Central Bank of India or Bank of Baroda. You can also try Dewan Housing Finance but its operations are limited to Mumbai.
I had taken a loan of Rs18 lakh to construct a house. I am still repaying the loan amount. I want to use the house to run a trust, with profit-earning possibilities. Will the loan particulars with the bank change if the purpose of construction changes? If so, what are the guidelines regarding this?
If you read your home loan agreement document carefully, you will find a clause that requires you to take the permission of the lender if you change the usage of the house from residential to commercial. From a credit perspective, the bank will be justified in charging a higher interest rate for a loan given to construct a property that is used for commercial purposes (rather than residential). Default rates on home loans to customers given for the purpose of buying their own homes are low the world over (including in India). For a commercial property, the interest rates are higher to compensate for the higher risk attached to the property. However, in practice, as long as you pay your instalments in time, the lender is unlikely to bother you now. You should consult a local lawyer to understand the municipal regulations regarding the usage of the house.
Can I increase the loan amount if I have opted for part pre-payment? If not, what other options do I have to change the particulars of the loan?
The loan amount cannot be increased once the loan is disbursed. However, you can opt for a top-up loan, which will be based on your income and repayment track record as well as on the market value of the property.
Queries answered by Harsh Roongta, CEO, Apnaloan.com. Send your queries and comments to firstname.lastname@example.org