To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.
I am a businessman living in a flat purchased three years ago in Mumbai. I had taken a home loan to partly finance the purchase of this flat. Now, I need some money for the expansion of my business. I want to know if I could apply for a loan against this property as it has a home loan outstanding against it.
The criterion for applying for loans against property is that it should be a freehold and self-owned property, having a clear and marketable title.
Since yours is a self-occupied flat, you could possibly extend the mortgage with your current home loan provider. For example, if you are an existing HDFC home loan customer, you would be eligible for a balance of 60% of the market value of your flat, including the present outstanding loan.
However, the loan eligibility will depend entirely on your repayment capacity.
I have a home loan from a leading bank for a flat I bought in Nashik. The loan was approved by the bank. However, due to some issues, the construction was stopped two months back. The builder has agreed to give me a flat in another project, which I am comfortable with. However, this flat is of a higher value. Kindly advise if I could go for a higher loan through my existing loan account.
From your question, it is not very clear whether you have registered your agreement and a part of the loan was disbursed.
Assuming you have registered your flat and paid the stamp duty, you could surrender this flat to your developer and apply for cancellation of registration and refund of stamp duty, provided it is done within six months of the date of your registration. Else you may not get your stamp duty refund.
On the home loan front, you could go in for a home conversion loan with your lender, whereby your existing loan could be transferred to the new property with an increase in loan amount subject to your current loan eligibility. This would save you from the hassle of prepaying the first loan, also saving you from prepayment and processing charges to the extent of the loan converted.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to firstname.lastname@example.org