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I took a home loan from one of the leading Indian banks.
The amount was only for around 60% of the cost of the home. The rest of the money I arranged from my savings.
Now I feel that I should have gone for a bigger loan. In this way I get more tax benefits and have more savings with me.
Is it possible for me to increase the loan amount now? If the same bank does not permit it I don't mind transferring the loan to another bank.
- Vinod Kannan
It's quite possible that the current bank itself will increase your loan amount.
However, they will do so provided they are convinced you can pay the additional increase in the Equated Monthly Installment (the amount you pay every month to the bank).
Your repayment track record also needs to be flawless if you want to get this done.
Like I mentioned, this can be done with the existing bank. If the bank does not oblige, you can always shift to another bank who will not only take over the current loan but also provide you the additional loan. Here too, the bank needs to be sure you can pay the additional EMI.
Presently I have two home loans which amount to an Equated Monthly Installment of Rs 9,050. It amounts to only Rs 1,08,600 per annum.
To get the maximum tax benefit, instead of opting for a new house, I would like to enhance the present EMI of Rs 9,050 to Rs 17,000 by reducing my home loan tenure. Currently, the balance number of years is 10. I would like to reduce it to 5 years.
Would there be a problem in doing so?
- Krishna Rao
Like I mentioned in the above answer, you can increase the EMI if you can afford it and you have an impeccable repayment record.
The excess principal paid will be eligible for a deduction up to Rs 1,00,000 per annum under section 80C. This will be in conjunction with other deductions available under that Section where the overall maximum limit is Rs 1,00,000.
Please note, however, that your interest payment will correspondingly go down as you will be repaying the loan faster. The shorter the tenure, the less goes out by way of interest payments. The deduction for interest is restricted by the tax man to a maximum of Rs 1,50,000 per annum.
You seem to have got a wrong impression of having the same tax benefits if you take another home.
To understand the tax benefits on a home loan read Got a loan? Read this.
To understand the tax benefits if you have two homes, read 2 homes? Check the tax impact.
Got a question for Harsh Roongta? Please write to us!
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