Is this the right time to buy my dream home, or should I wait?"
"What kind of loan rate should I go for -- fixed or floating?"
"Is the home loan rate set to go up?"
With so much happening in the home loan market, these questions are bound to bother you if you are considering buying a home. After all, it is your hard earned money that will eventually service that loan. Naturally, you'd want the best deal possible.
Home loan expert Harsh Roongta answered such queries during a chat on December 19.
"The right time to buy a house is when you need a home to stay in :-) :-). Seriously, if you are buying for the sake of staying, do not try to time the purchase too much. Over the long term, any fluctuations will even out. Go for a transparent floating rate loan. If at all you are determined to go for a fixed rate, at least sign up for a genuine fixed rate loan which remains fixed for the entire duration of the home loan. Both ICICI and HDFC provide such fixed rate loans."
For those of you who missed the chat, here's the transcript.
HARSH ROONGTA says, Hi. This is Harsh Roongta. I am ready to take your questions now.
Marans asked, I am into software profession and earning 3 Lakh per annum. I am planning for home which will be around 1000 sq. feet. If I consider maximum price of 30 Lakhs how much loan should I take and for how much duration ? My current balance is around 3 Lakh and as I am into software profession salary growth will be good. I am 26 Years old. So please suggest me maximum amount of loan and duration which will suit me best.
HARSH ROONGTA answers, Based on your salary and age details, even if you go in for a 25 year loan (which some banks give), you will be eligible for a loan amount of about Rs 15-16 lacs. You will need to arrange for the balance amount from your savings. Even if you go in for a step up plan (under which the EMIs are lower in the beginning but rise later), you will still only be eligible for only about Rs 17-18 lacs of loan amount.
shreekanth asked, Is it right time to buy a house.Which loan should i go for, fixed or floating .What is the prediction on home loan interset rate?,is it going to increse
HARSH ROONGTA answers, The right time to buy a house is when you need a home to stay in :-) :-). Seriously, if you are buying for the sake of staying, do not try to time the purchase too much. Over the long term, any fluctuations will even out. Also, nobody can predict home loan interest rates (definitely, I cannot). Go for a transparent floating rate loan. If at all you are determined to go for a fixed rate, at least sign up for a genuine fixed rate loan which remains fixed for the entire duration of the home loan. Both ICICI and HDFC provide such fixed rate loans.
vinod76 asked, I am a NRI and looking out for a loan from a bank, which gives me the maximun tenure to repay. Please let me know, which is that bank that give max tenure to a NRI
HARSH ROONGTA answers, There are banks that give up to 15 years for NRIs. There is no regulatory bar on the period for which the loan can be given, but the general practice by banks has been to give smaller tenures to rich NRIs :-) :-).
divyapromod asked, If I take a home loan to purchase a second home and show the rental income from it in my IT returns, can I get any benifit on the interest paid for this home loan ?
HARSH ROONGTA answers, It is a popular misconception that deduction is available only for one house or that the total deduction is limited to Rs 1,50,000. I am saying it with full responsibility -- there is no such bar in the IT act.
svmoorthy asked, I am From Kolkata. heared there are options to own a home without downpayment and The down payment can be paid along with monthly rentals.is it true?
HARSH ROOGNTA answers, All banks require some amount of down payment (minimum 10 per cent). What you can do to fund it is to take a loan against securities such as life insurance policies or NSCs, etc.
anild asked, I have taken a home loan of 30 lakhs. I will get the possesion of flat by March 2008. Presenlty I;m paying EMI's. Can I take tax benefit on home loan and interest and HRA benefit at the same time?
HARSH ROONGTA answers, You cannot get a tax benefit on a property that is under construction. Hence, you will not be eligible for any tax benefits for the financial year ending on March 31, 2007. If you do indeed get possession in March 2008, then, for that year, you will be eligible for tax benefits.
SRID asked, Is it advisable to prepay the loan ,which i have got at an interest of 8% or use the exisiting funds in mutual funds?Pl advise
HARSH ROONGTA answers, If you have a fixed interest rate of 8 per cent, you will be better off investing in an income mutual fund.
iimcalcutta_smp asked, Are we eligible for tax exemption if we purchase plot/land through loan? Rajendra
HARSH ROONGTA answers, No tax benefits are available for a loan taken to buy a bare plot of land.
S_K_ asked, Dear MR Roongta, Which banks give a "Seller Balance transfer" facility? I mean, if buying a resale property, and if the seller already has a loan, which banks can directly pre-pay the seller loan even before Registration? Thanks in advance.
HARSH ROONGTA answers, This is a very interesting question. No banks are offering it in India as yet. But in case you wish to avoid all hassles, you can ask the seller to approach your existing bank to provide him the loan. In such a case, this will not be a problem.
prabhulal asked, Hello sir, I have purchase a property on home loan can i sell this property if i have not finished my installment for EMI. if yes who will pay balance amount for housing loan
HARSH ROONGTA answers, You will need to clear off the entire loan amount before the bank releases the title deeds to you or to the buyer.
cdrnitin asked, Sir, I want to buy flat of a friend who is paying EMI for housing loan taken from HDFC. The flat is in gavthan area at Seawoods-Dharave, Navi Mumbai, for which not many banks are giving loan to me, even though I have very good loan paying capacity. Can we together request HDFC to transfer my friend's loan to my name at the same terms and conditions. Please advise.
HARSH ROONGTA answers, If your friend has already been funded by HDFC for the loan, then the chances are that you too should be able to obtain the loan. If the legal problems are of recent origin (dating later than the date of your friend's purchase), then this could be an issue.
HET asked, SIR,I HV A HOME LOAN OF 10.30 LAKH IN STD.CHARTERED BANK HOME SAVER ACCOUNT. I M 26 MY EMI ABOUT 8,700 I REGULARLY PAYING 20,000 PER MONTH AND ALSO DEPOSITED 2 LAKH IN SAME ACCOUNT HOW QUICK I WILL COMPLETE MY LOAN.HOW MUCH I CAN SAVE IN INTREST, AND IT IS BENIFICIAL FROM TAX BENIFIT
HARSH ROONGTA answers, In a home saver account, the interest is calculated based on the average loan outstanding after including the credit balances in your linked account.
abhi_merukar asked, How many homeloans and the tax emeptions i'm entitled for in my lifetime??? i hear it's 2 loans. Please comment
HARSH ROONGTA answers, There is no such bar in the IT act. You will get deductions for as many loans taken to acquire as many house properties as you may own in your lifetime. I repeat -- NO RESTRICTIONS AT ALL.
mrams asked, Dear Sir, We have a plot and planning to build a House there. The land is in my father's name and he got expired 3yrs back. I am the only son and I have 3 sisters. Can I get housing loan for building house in this land?
HARSH ROONGTA answers, You will need to get the land transferred to your name by executing the will of your father, if he has left one, or by getting approval from your sisters. Then you will be eligible for a loan.
GRNayak asked, I have taken housing loan of Rs.5 lacs on 15 year term from SBI in Mar-2005. I am paying the EMI very regularily. I have opted for fixed interest of 8%. In the copy of loan sanction letter given to me, it clearly mentioned that the interest rate will remain constant for entire period of loan. Please let me know in case SBI invoke reset clause and revise the interest rate upward contrary to the contract terms, please let me know what is the recourse available to me ?
HARSH ROONGTA answers, The agreement with SBI will clearly have a reset clause for the bank at the end of two years. I am afraid there is very little you can do about it. That's the reason you should read agreements carefully before you sign them.
sunny.seth@rediffmail.com asked, Wht is the current interest rate of loans ?
HARSH ROONGTA answers, The current rate for floating rate loans for 20 years is around 9.25 to 9.75 per cent, and for a genuine fixed rate 20 year loan, around 10.75 to 11 per cent.
HARSH ROONGTA says, Ok friends. This was a great chat. I also sharpened my typing skills :-) :-). For any further questions, refer to the transcript of this chat. Bye and take care.
Harsh Roongta is the CEO of apnaloan.com, a site that helps people get competitive loans. After a successful entreprenuerial stint and an equally impressive career at ICICI later, he co-founded apnaloan.com in 2000.
Harsh is the co-author of a popular guide to home loans, Complete Home Loan Guide.
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