Can I take a home loan from my dad and the bank?

Can I get a home loan from my father for purchasing a house? A bank told me I could not do it.

- Charu Marwah

There is no law preventing you from taking a loan from your father to buy a house. What the bank probably meant was that you will not, in such a case, get any income tax benefit.

The bank is only partially right.

The interest payable to your father (or for that matter to any person) on a loan taken to acquire/ construct a house property is eligible for the same deduction you would have got had you had taken a loan from a home finance company.

However, the deduction for principal portion of the loan repaid (available under Section 80C) is available only if the loan is taken from formal sources laid down in that section (which obviously does not include parents, relatives and friends).

Please read: Can I take a home loan from my family?

My father has a plot of vacant land. My brother, sister and I would like to build a two-storeyed home on it. Can my brother and I apply for a joint loan to construct this house?  

- Sampath Krishnaprasad

Yes you can.

But your father, as the owner of the land, will have to be a co-borrower for the loan.

Also, you will be able to avail of the tax deduction on the loan repayments only if you (and your brother) are owners or co-owner of the house property.

Please examine the issue of becoming an owner or co-owner in this light. Do so in consultation with a local property lawyer and your tax consultant.

Please read: 10 questions on joint home loans answered

I applied for a home loan with ICICI Bank and paid 1.5% of the loan amount towards processing charges (Rs 7,500) by cheque.

A month later, I was told by the bank over the phone that, due to legal implications, the loan could not be granted.

Later, I applied to IDBI Bank and the loan was sanctioned.

Can I claim the processing charges I have paid ICICI Bank?

- Jeevarathnam G

However, if you take up the matter with the senior officials of the concerned bank, they may agree to refund a portion of the processing fee paid by you.

Please read What tax benefits can I get on my home loan to see if processing fees are included under the home loan rebate.

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