By Chaitali Dutta
My home loan EMI will end after 10 months. I want to apply for a top-up loan for renovating the house. What are the conditions for a top-up loan or should I take a loan against property after the current loan is fully paid?
If you look at the interest rate, a top-up loan will be a better choice as the loan against property, typically is a higher interest loan. Take a quotation for home renovation and submit it to your existing loan provider immediately. The loan will be sancti-oned subject to rules as applied to home loans. You have to submit proof of renovation done, once you take such a loan.
I have taken a home loan for an under-construction building. It took eight years to complete construction. Can I claim tax exemption on a home loan after the possession? If not, can I transfer the loan to another bank and then claim the exemption?
Even if the loan is transferred to a new service provider, the construction period will remain the same as eight years, being more than five years, the prior-period interest will not be eligible for deduction under Section 24. You will be able to claim the benefits only post possession, on both the interest and principal paid under Sections 24 and 80C.
As the interest rates on personal loans are very high, what are the other options to borrow `10 lakh for a short term at a cheaper rate?
Yes, personal loans are no-security loans, hence expensive. If you have any financial assets, like shares /mutual funds/ LIC policy (traditional)/bank FD, you may consider taking a loan against such an asset. They will be priced lower than a personal loan.
My son gets offers to avail loans from fintech companies without any requirement for collateral. Should he take a loan from the app?
A loan should be taken only when the need arises. If your son has a specific purchase in mind, for which he does not have immediate funds, he could take a loan. I would also advise against leveraged assets, where a loan is taken to invest in risky assets.
The writer is founder,
AZUKE Personal Finance Advisory (www.azukefinance.com).
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