Ask Mint | You cannot use old loan for new home

Ask Mint | You cannot use old loan for new home

I am planning to buy a flat along with my wife. My wife will make the down-payment and repay the loan from her own sources. I would be the joint owner and a co-borrower only for the purpose of smooth succession. I intend to take the house on rent from my wife and claim house rent allowance (HRA) exemption. Can I do that? What if I am not the co-owner and just a co-borrower?

You can claim tax exemption on your HRA, with respect to the rent paid to your wife, only under specific circumstances. If you own or co-own the property, then you will not be eligible to claim HRA exemption by paying rent to your wife. However, if you are not a co-owner and if the transaction with your wife is an actual one and not a sham, i.e. you pay commercial rent, you may be able to claim exemption on your HRA. However, this transaction is best avoided as the income-tax department is unlikely to accept that the transaction is on a commercial basis as the landlord (your wife) will be staying with you.

I had dues of Rs50,000 on an Axis Bank credit card. I reached a settlement with the bank at Rs27,000 and even got a settlement letter for it. But, it still affects my credit score with the Credit Information Bureau (India) Ltd. How can I clear it?

Most people do not realize that when they reach a settlement with a bank for an amount lower than what was due to the bank, then the balance is still shown as “written off" even though the bank agrees not to pursue the collection any further. So, in cases where there is a disputed amount, it is a must to get a confirmation from the bank that the balance amount is not shown as “written off". If your amount due was not disputed, you can pay off the written off amount to the bank. Once you do that, your record will show that you have paid off all your dues even though the payment was delayed.

I have a home loan with ICICI Bank since 2005. I purchased a flat in Kanpur in 2005. I am getting the possession now, but the builder is allotting me another flat which is smaller than the earlier one and cheaper, too. The builder is ready to refund the difference in the price of the two flats. We have a sales agreement, but do not have the registry papers and no registered agreement. My loan was approved for the first flat. Will the bank now agree to transfer the loan for some other flat?

It is very surprising that the bank gave you the loan without insisting on the registered sale agreement. If they have already disbursed the loan, they may not agree to shift the loan as the underlying asset is getting changed here. This implies that if you took loan for X property and now you have been allotted Y property, you will have to initiate the process again for the new property.

Harish Roongta is CEO of

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