Conservative Lenders Averse To Giving Home Loan To Single Borrowers, On Old Properties

Home loans depend on the eligibility of the borrower and the residual life of the property as determined by the bank. Rent received from house property is treated as income. Expenses on registration and stamp duty on home is eligible for deduction under Section 80C within the overall limit of Rs 1.5 lakh
SBI Home loans
SBI Home loans

I am a single woman and recently bought a house for Rs 28 lakh in my name. The flat is in a 30-year-old building. I need a loan of Rs. 11 lakh. Will any bank give loan to a single borrower?

Answer: A conservative lender may not grant a loan on such an old property. That said, there are no hard and fast rules about the age of the property being the criterion for a home loan. That depends on the residual life of the property as appraised by bank.

If, according to the opinion of the engineers of the bank, the residual life of the property is more than or at least equal to the loan tenure, then you should not have any problem in getting the desired home loan. 

Also, if your income is sufficient enough to justify servicing the equated monthly instalment (EMI) on the home loan, you should not have any problem in getting a loan.

That said, banks are typically are not very enthusiastic about lending to a single borrower. So, it would be better if you can get either of your parents to be co-borrowers with you (their incomes and age are not relevant). 

The lender is more comfortable knowing that somebody else will be responsible for doing the running around for repayment of loan in the event of death of the main borrower. However, if you take an insurance policy to cover the home loan and assign the policy to the lender, it might be possible to get the loan even without having any co-borrower. 

I have a single house in Delhi and my net EMI outgo is Rs. 5 lakh per annum. I receive a rent of Rs. 60,000 per annum from that property. I stay in Mumbai on rent. What is the income tax benefit I can avail against this home loan?

Answer: Since the property is rented, you can claim the full interest in respect of the loan against the rental income under Section 24 of the Income-tax Act, 1961. However, the rent you receive will be treated as income from house property and would be taxable. 

You can also claim a tax benefit of Rs. 1.50 lakh for the principal of the home loan under Section 80C. 

The taxable income of the let out property will be arrived at by deducting the full interest in respect of such property from the rent received by you in addition to 30 per cent standard deduction in respect of repairs etc., subject to condition that any loss under house property can be set off up to Rs. 2 lakh against other income of the same year, and the unabsorbed loss has to be carried forward for set-off in eight subsequent years against house property income only. 

You can also claim exemption for house rent allowance (HRA) for staying in rented property in Mumbai, provided you are able to prove that you are staying in a premises not owned by you, and you are actually paying rent for it, and you are in receipt of HRA from your employer.

I have bought a house on loan. I am paying a stamp duty of Rs 3 lakh on my house registration. Can I get tax benefit of stamp duty payment over and above the principal repayment of Rs 1 lakh? 

Answer: Expenses incurred in respect of registration fee and stamp duty for a residential house are eligible for deduction under Section 80C within the overall limit of Rs. 1.50 lakh. 

You can get tax benefit on the stamp duty along with other deductions, such as repayment of housing loan, life insurance premium, and contribution to provident fund, to the maximum of Rs 1.50 lakh every year. The overall amount of deduction cannot exceed Rs. 1.50 lakh.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.) 

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