Struggling with two EMI payments?

Home loan expert Harshad Mehta provided the answers in a chat with Get Ahead readers on Wednesday, January 3.

For those of you who missed the chat, here is the transcript.

Part I: Fixed or floating home loan?
Part II: Has your fixed home loan rate been increased?
Part III: Can I get a tax benefit on HRA and home loan?
Part IV: Don't have enough money for downpayment?

Jatinder Singh asked, Hi Harsh, I am having a personal loan with one of the banks, can that be clubbed with a home loan as I can pay only one EMI at a time. Please suggest.

Harsh Roongta answers, If the value of the home has gone up, you should approcah your existing lender to give you a top-up loan which you can utilise to pay off the personal loan. In case your existing bank is not willing to provide the top-up loan, you can approach other banks who will be happy to take over the existing home loan and provide a top-up loan as well to enble you repay the personal loan.

Suyash asked, Harsh, I am 26 years of age and working in IT sector. My wife is also working in a MNC and together our gross salary is 7.5 Lakh per annum. What is the loan amount that we can get and how much down payment as a percentage do we need to give so that we are able to purchase the house.

Harsh Roongta answers, Please see the advanced loan eligibility calculator by clicking on http://www.apnaloan.com/index.php?option=com_calculators&task=advancedhomeloan. Down payment is normally 15% of the property value (including registration and stamp duty).

jayashree asked, Hi Sir I am interested to buy flat worth 32/33lakh .My salary is 5.25lakh per annum I would like to know the max. loan that I can get and also EMI

Harsh Roongta answers, Please use the advanced loan eligibility calculator by following this link. http://www.apnaloan.com/index.php?option=com_calculators&task=advancedhomeloan. You can find out the EMI for a specific loan amount by using the EMI calculator

srini asked, are the rules for lending money for a NRI different , for different countries. what factors can improve the lending facility , say if the NRI is resident of poor country like uganda

Harsh Roongta answers, Yes, banks have different norms for different countries. These are primarily to recognise the difference in the stability of income (a stable political regime leads to stablity in income) and the ability to repatriate your earnings based on the exchange control regulations of the concerned country. If you have any income arising in London (which is frequently the case for Indians employed in Afican countries) and can show proof of the same, it will improve your eligibility substantitally.

brijesh asked, i just got my plan sacntioned, i have a plot on which i need to start construction. the loan rates have been increasing offlate and iam confused as to whether to take floating or fixed, i also heard that fixed doesnt mean its fixed for entire period, it can be revised as well. can u suggest on the above

Harsh Roongta answers, This is one question that bothers all buyers. Fixed gives a sense of security... while you wonder am I paying too much all the time. Our recommendation on this million dollar question is given below.

Firstly, this is not a one time decision and needs to be reviewed periodically.

Secondly, understand what exactly 'Fixed rate' and 'Floating rate' mean before you take a decision.

Fixed Interest Rate loans: These loans are normally priced higher than a variable rate loan for a similar tenure. That is, in the present market scenario, while you would be able to get a floating rate loan for 20 years at 9.5 per cent interest rate, the fixed rate would be somewhere around 10.5 to 11 per cent.

The other option is variable/ floating rate loans. This kind of loan is also called 'adjustable rate' home loans. Here, the interest rate is linked to a benchmark rate. Some banks use their 'prime lending rate' (PLR) as the benchmark rate.

Some banks have a specific benchmark rate that they use for home loan purposes. Typically, the interest rate applicable to your loan tends to be a certain percentage below this benchmark rate and ideally the benchmark rate should vary exactly as per the market conditions (though it rarely does -– it is quick to go up but rarely shows the same alacrity while going down).

Apnaloan.com's recommendation is to go in for a transparent floating rate in today context (this answer is given in January 2007).

Roby asked, Hi Harsh, I have availed of a Home loan and purchased a flat. However due to my Company Shifting base I have had to relocate to a place closer to the Company but still in the same city.And I have rented out my flat. Under such a situation Can I avail of the benifts of Home Loan as well as HRA for income tax purposes?

Harsh Roongta answers, Contrary to popular opinion, there is no restriction under the IT Act to get both. Many salaried consumers take a home loan to acquire a residential property, but do not stay in that property for various reasons. They stay in rented premises for which they pay rent.

If they are receiving a house rent allowance from their employer, a question that frequently arises is whether they can claim exemption of their HRA based on the rent actually paid by them as well as the interest payable on the loan taken to acquire the owned property. This is such a widespread question that it rightly justifies an elaborate reply of this kind justifying that both deductions are available.

srini asked, dear sir, what percentage of carry home pay will be lent as loan ( my age: 30,carry home: 40k,no debts,monthly expenses : 8k)

Harsh Roongta answers, Please see the advanced loan eligibility calculator http://www.apnaloan.com/index.php?option=com_calculators&task=advancedhomeloan.

AvinashRS asked, Hi Harsh, I have taken a home loan from Stand Chart Bank on Home Saver product. The apartment will be ready only by Dec 2007 and right now I am on Pre EMI. Can I claim tax benefit on my Pre EMI for the Fin Year 2006-2007?

Harsh Roongta answers, No.

GIGIM asked, When I avail of home loan , whether I can claim both interest deduction on self occupied property and HRA benefit.Please offer your comments

Harsh Roongta answers, Already answered earlier.

Harsh Roongta says, It was good chatting with you. Due to time constraints, I will not able to answer all your questions, but do join me next fortnight on the Harsh Roongta chat and I will try and answer them then. Watch out for the details of the next chat on rediff.com. Bye for now.

Part I: Fixed or floating home loan?
Part II: Has your fixed home loan rate been increased?
Part III: Can I get a tax benefit on HRA and home loan?
Part IV: Don't have enough money for downpayment?

Harsh Roongta is the CEO of apnaloan.com, a site that help people get the most competitive loans. He is also the co-author of a popular guide to home loans, Complete Home Loan Guide.