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Ask Mint | Can pay dad’s EMIs, but no tax benefit

Ask Mint | Can pay dad’s EMIs, but no tax benefit
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First Published: Mon, Jan 11 2010. 08 57 PM IST

Updated: Mon, Jan 11 2010. 08 57 PM IST
I have a loan for a house under construction. The house will be ready in another year, but I don’t like the locality any more because there are no chances of development there. I want to sell the house. Is it possible to sell a house that is on loan? What all is needed to sort out the loan issue?
—Shalini Singhania
Yes, you are free to sell your under construction house and close your loan by prepaying the amount. It is always advisable to inform your lender that you would like to sell your property. In any case, without prepaying your loan, you will not be able to complete your sale transaction. Alternatively, you could transfer this loan to another property, in case you are thinking of immediately buying another one. This will help save pre-payment charges, if any, on the amount converted.
I want to take a home loan along with my mother who is a school teacher, in a 75:25 ratio. Is it possible? What are the formalities involved? As of now, I will not be able to afford paying 100% EMI from my salary, but is it possible to transfer the entire loan in my name at a later date, while keeping my mother a joint owner in the same ratio?
—Surya Mishra
Under normal circumstances, most lenders offer a joint home loan only to spouses. A joint loan with parents or siblings can be taken only after considering several factors and which vary from case to case. Assuming that your loan has been granted, the name of the co-applicant cannot be removed. In any case, I am not sure what is the purpose of removing her name when she would continue to remain a co-owner to the property. You can pay the entire EMI from your bank account.
My father owns a house in Dehradun, on which he has a home loan. He retired last year and will not be able to service the equated monthly instalments (EMIs) for the house now. I am willing to pay the EMIs. Can I do so on his behalf or will the loan have to get transferred in my name? Putting money in his account every month is a little difficult as I am based in Mumbai. Please tell me a way out? I would prefer an electronic clearing service (ECS) of the loan amount.
—Ranjan Shah
Yes, you can pay the EMIs on behalf of your father. For this, there is no need to get the loan transferred in your name. However, you need to make a note, saying that since you are not a co-owner of the property, you will not be able to claim tax benefits on the amount you pay as EMIs. These days most lenders offer ECS facility. One way is to open a joint account with your father and then issue standing instructions from the account. Don’t forget to inform the lender about the new arrangement.
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First Published: Mon, Jan 11 2010. 08 57 PM IST
More Topics: Loan | EMI | Tax | Investment | Money Matters |