Skipped your EMI? Banks can take legal action

Have a query regarding your home loan? Maybe we can help.

Drop us a line and our expert, Harsh Roongta, will answer it.

Got a question for Harsh Roongta? Please write to us at getahead@rediff.co.in!

If I skip my EMI then is there any period of concession? If not, then what are charges levied?

The bank will charge you a penalty on the late payment of your EMI (equated monthly installment). This amount will vary from bank to bank. However, you can contact your bank in unfortunate scenarios and explain your position to them.

However, it is advisable to make your payments on time to avoid being on a defaulter's list and bank can take legal action against you if you continue to default. It will also affect your credit rating reducing your ability to borrow in future.

I'm planning to purchase a flat for which I have to go for a home loan. I want to know how much loan I can get considering that the combined take home of me and my wife is around Rs 60,000 per month. Also what's the percentage of loan I can get from the leading banks and how much capital will I have to raise on my own? Please clarify.

Siba

The amount of loan offered by the bank differs according to the borrower's income profile and repayment track record. As a thumb rule assuming you are both below 40 years, you may get four times the annual gross income as a housing loan. You will need to provide around 15 per cent of the cost of the flat from your own sources.

I have housing loan from ICICI Bank and I am availing the income tax benefit on both principal and interest up to Rs 1.3 lakh from the last four years. In case if I take a fresh loan from the same bank for repair and alteration, will the interest portion of new loan be eligible for income tax benefit? Please help me.

Regards
NB Nayak

If the loan is used for repair, renewal or reconstruction of the house property, the interest rate payable on such a loan is eligible for deduction. You will have to prove that the loan was used for repair, renewal or reconstruction.

If you stay in the same house, and since you have also taken a loan for acquiring/constructing the house the limit for deduction is combined limit of Rs 1,50,000.  No deduction is available for the principal portion of the repayment on home improvement loans (loan for repair / alteration).

Ours is a joint family. Our present house is small. The house is in the name of my brother. We want to demolish and construct a new house on the same plot. My brother is a government servant. His loan eligibility is less compared to the estimated cost of the proposed house. I am a manager in an MNC. If I add up my loan eligibility it will be more than what meets the estimated cost. Will I get a home loan as a co-borrower by signing some agreement with my brother or a financial institute? As an asset, I own a plot (which I don't want to sell).

Mahesh Naik

Almost all banks allow co-applicants for a home loan to club incomes and thus help increase the loan amount. Most banks allow spouses (husband/wife) and parents as home loan co-borrowers. However, certain banks do allow blood brothers and co-borrowers provided they are co-owners of the property.

Since this is not so in your case it might be more difficult to get a loan based on your income. You can of course try for a loan against your existing non-agricultural plot. Again that is not very easy to get but you can certainly try.

I have purchased a flat for investment purpose and got loan from LIC Housing Finance Ltd. I am paying my EMIs regularly. Can I sell the flat while the loan repayment is not over?

Ram

Yes, you can, but you will need the bank's consent. This consent letter will typically provide the amount, on payment of which the outstanding loan will be fully paid off.

This amount includes the prepayment charge, if any, chargeable by your bank and should list the documents held by them that will be released on payment of the stated amount. This amount mentioned in the certificate is typically calculated as on a future date, to enable time for the buyer to arrange the payment.