Home Loans: No prepayment fees upon closure; can redeem your loan at once

Yes, you can apply for the PMAY grant if you apply for a new loan at the regular interest rate from another bank.

From Chaitali Dutta

I want to repay my home loan within one year. Should I clear all at once or can I pay some money every month? Will the bank impose a fine?
—Ashish Kumar
If you have the money to hand, it is advisable to pay off the loan in one go. However, if you have a small surplus every month, keep paying partial loans from time to time. Check the fine print in your sanction letter to see if multiple payouts are possible. Prepayment fees are no longer valid but are subject to certain conditions that vary from bank to bank. First, check with your bank for the details.

My brother has a home loan of Rs 20 lakh. He wants to sell the property. Can I take out a loan to buy this property?
—Tushar Singh
Yes, this is possible as long as you conclude a proper sales contract. If there is a sales price below the Circle tariff on the sales slip, you must always pay the stamp tax according to the higher Circle tariff. In addition, your brother must show the sales proceeds for the purpose of the capital gains in the amount of the district price. I propose to make the agreement according to the market price in the region.

I am taking Rs 10 lakh from my brother to pay off my loan. I have to pay it back. Should I show it in my ITR as “exempt income” or should I take out a loan agreement?
—Tushar Chaudhari
Since you intend to repay it to your brother, report it as a loan on your books and ITR. Likewise, your brother should show it to you as a loan. That way, the installments you pay him back won’t count as income for him. It is a good idea to sign a deed of gift for this transaction.

I took out a five year car loan last year. Now I have some cash from the life insurance maturity. Should I pay off the loan amount or invest the money?
—AR Rao
If you can get a better interest rate on the excess than what you pay on the car loan, then you should go ahead and invest. I am assuming that you have a time horizon of less than five years since part of the loan will be paid off. In such a short amount of time, a safer debt investment would be advisable. But then you can’t earn more than the loan interest. This may only be possible if you invest in equity. However, valuations are at their peak, so a measured monthly exposure to stocks is better.

The author is the founder of AZUKE Personal Finance Advisory (www.azukefinance.com). Send your inquiries to [email protected]

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