Home loan repayment is categorised into repayment of principal amount and the interest on the home loan.

I am working in a public sector bank from where I have availed a housing loan at concessional rate available to its employees. Now, I have been selected at a higher post in another state-owned bank where there is a one-year probation period. My bank is not allowing me to continue my loan even on commercial rate. How I can continue my loan?
—Dhiraj Seth

You could opt for a home loan balance transfer facility which will transfer your existing home loan to another financial institution (FI). The balance transfer loan amount is determined taking into account factors such as repayment track of balance transfer loan, repayment capacity, continuity of income, etc. While switching to another lender, a borrower should conduct a comparative study of the FIs and consider factors such as pedigree of the FI, customer service and operational efficiencies, processing fee, etc. In case of any concerns with your current lender, it is advisable to discuss it with the lender so that you canavail the best possible deal without shifting your home loan.

I need a home loan. Should I give copies of all the required documents to two banks just to be sure?
—Aditya Singh

You may apply for a home loan with multiple financial institutions. However for each application, the lending institution charges you a processing fee which covers the operational cost of processing your home loan.There will also be multiple hits on your bureau score which may affect your credit score. One should look at the institution holistically to determine the best suited financial institution. Several financial institutions offer competitive interest rates and best in class customer service which greatly assist customers in their home buying process.

Will I continue to get income tax benefits on home loan if I repay my loan in full?
—O P Variyar

Home loan repayment is categorised into repayment of principal amount and the interest on the home loan. The current applicable tax exemption under Section 24(b) is Rs 2 lakh for the interest amount paid in the financial year and up to Rs 1.5 lakh under Section 80C for the principal amount repaid in the same year.

The writer is JMD & CEO, DHFL. Send your queries to fepersonal finance@expressindia.com


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