Home loan faqs

Yes, you can increase or decrease the amount of loan, but it has to be done before the final loan disbursement is made. You can always decrease the amount of loan sanctioned to you, but if you want to increase it then you need to show proof of income that would fulfil the home loan lenders’ income criteria for that particular loan amount.

Of course, you can sell the house even when the home loan is outstanding but you will have to take care of the following things:

1.You will need a consent letter from your home loan lender. This letter usually contains the amount at which the home loan would be considered fully paid off. This amount would also be inclusive of prepayment charges as applicable and is calculated at a future date to give you enough time to find a buyer. Based on this letter, you can negotiate with potential buyers.
2. If the buyer wants to take a loan to purchase your house the process would be much simpler if he/she approaches the same lender. Then the lender does not need to release the title papers to another lender before getting the payment.
3. If the buyer wants to make a direct outright payment to the bank he/she can do so with the help of the consent letter and the balance amount is paid out to you. The property papers will be released only after the bank has recovered the entire amount, including the prepayment charges.

It is not mandatory to buy property insurance when you are availing a home loan, but since home is one of the most significant assets for many it is advisable to go for it. Currently, property insurance is quite affordable and it helps you eliminate risk of loss of property or damage to the property based on the type of insurance you opt for.

A change in the value of the underlying property does not affect your EMI payments. Simply because the EMIs you pay are based on the amount of loan taken by you for buying the property at a particular point of time. But when there are interest rate fluctuations your EMI might get affected as banks might increase or decrease either the tenure of your loan or EMI payment based on different interest rate calculations.

Yes, you can get tax benefits under Section 80C and Section 24 on both housing loans. However, the total amount on which you can get tax benefits will be Rs 1,00,000 and Rs 150,000 respectively across both loans.

In such case, both husband and wife can individually claim tax benefits on interest repayments up to Rs 1,50,000 under Section 24 and on principal repayments up to the maximum amount of Rs. 1,00,000 under Section 80C. In case of Section 80C, it is subject to the maximum amount of Rs 1,00,000 across all 80C investments.

Under the following scenario you can claim both the tax benefits as well as HRA.

You can claim tax benefits on your home loan only if your home is ready to live in during that financial year. Once the construction of your home is complete, the HRA benefit stops. However, if you possess a house, i.e., you own a house and have rented it out and are staying in a rented accommodation, you will be entitled to all the three benefits mentioned below. However, in this case, the rent you receive would be considered as your taxable income.

1. Tax benefit on principal repayment under Section 80C
2.Tax benefit on interest payment under Section 24
3.HRA benefit

You will be eligible to claim tax benefits on both the interest and principal components of your repayment during that financial year.

1. Under Section 24, you can claim up to Rs. 1,50,000 or the actual interest repaid, whichever is lower. (Also note that you can claim this interest only when you are in possession of the house.)
2. Under Section 80C, you can claim the principal up to the maximum amount of Rs. 1,00,000. But this is subject to the maximum level of Rs 1,00,000 across all 80C investments.
3. To avail the above tax benefits, you will need to produce a statement by your lender, showing the repayment of the loan for the year as well as the interest and principal components of the same.

1. Administrative/processing fees: Most banks charge processing or administrative fees, either separately or include them in the loan amount.
2. Prepayment charges: These are the main charges consumers should take into account while selecting a bank. Banks charge a penalty for part or full prepayment but they may reduce or waive these charges for business reasons. Also, the prepayment made after the required minimum loan period is over does not attract any charges. This is an option that should be thoroughly studied and compared by the consumers when opting for a home loan. In case the borrower is transferring the loan to another lender he/she will need to pay the full prepayment charges.
3.Technical or valuation charges: These fees are payable to the lender or to the technical consultants of the lender.
4. Legal fees: These fees are payable to the lender or to the legal consultants of the lender.
5. Stamp duty on creation of mortgage: Some banks charge this fee while others normally just have a clause that requires this fee to be paid in the event the state government actually charges this amount. A consumer should not eliminate a lender just because he/she is paying this stamp duty to the government.

In monthly rest, the interest is calculated on the outstanding principal at the beginning of every month which is later deducted from your EMI.
In annual rest, the interest is calculated on your outstanding principal amount at the beginning of every year. It is also known as ‘Yearly Reducing Balance’.
Other things are common for both cases. Monthly rest or monthly reducing balance is the better option amongst the two as you get immediate credit for repayment and the interest component keeps reducing immediately on a monthly basis.