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Ask Mint | Tax exemptions on home loans cannot be availed after property has been purchased

Ask Mint | Tax exemptions on home loans cannot be availed after property has been purchased
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First Published: Sun, Jul 12 2009. 09 40 PM IST

Updated: Sun, Jul 12 2009. 09 40 PM IST
To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
I bought a property last month located on the outskirts of Mumbai. Since I wanted to urgently close the deal, I somehow arranged for some part of the funds through my own sources and the rest of it I took from my father. Now I wish to repay my father and hence was wondering if I could get a loan for the property. One of my friends told me that since I am applying within six month of my property purchase, I could get a regular home loan and same rates and tax benefits will be applicable as any other home loan. Is that correct?
For deriving benefits similar to a regular home loan in terms of interest rates or tax exemptions, it is essential for your loan application to at least be in process at the time of purchase.
Since you have already bought your flat in the last month and all the formalities of property purchase including full payment are complete, you can now apply only for a loan against property whereby you will, depending on the lending institution, get up to 50-60% of the market value of your flat by mortgaging your flat.
Thus while you will not get a regular home loan, if you have to generate resources to pay back your father immediately, instead of applying for a personal loan, loan against property would be a better option as interest rate would be lower, the loan period is much longer as well as the loan amount one can get would be much larger compared with a personal loan.
I live in a good locality named as Somajiguda in Hyderabad on rent. I have shortlisted a flat which was built in 1988. It is 21-year-old building but in good condition. The owner has quoted a price of Rs30 lakh for the flat. I am finding it difficult to get finance for this flat. In fact one of the bankers told me that they do not give loans for property, which is more than five years old. Please advise how do I go about this.
While purchasing a resale property the key concerns of a homebuyer normally include matters pertaining to the property’s title, its technical evaluation, its pricing, etc.
At HDFC, we provide up to 80% of the value of the resale property and the valuation is undertaken with the help of in-house valuers.
We have special counsellors at our offices who look at resale properties as they understand the real estate market much better.
We provide assistance on all legal and technical aspects with regards to documentation of the resale property such as title deed, agreement copies, share certificate etc associated with buying the property.
Thus, as long as all the requisite documents are available, and the resale property fulfils our criteria, we would finance its purchase even if it is an old property, provided HDFC is satisfied that the property is in a good condition after technical evaluation of the property by HDFC.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to askmint@livemint.com
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First Published: Sun, Jul 12 2009. 09 40 PM IST