Sungar: I have taken a home loan. 20 Lakh is the principal amount outstanding. 77 months pending terms/EMIs. Interest component I paid in 2016-17 is 2 Lakh. I will not get full benefit of income tax for interest component as rates have gone down. Please suggest what should I do? Is closing of home loan a better option or invest in another property is best option?

You bought a house to live, and you borrowed because you do not have money to pay the amount yourself. If this has not changed, how will you close the loan? If you have money in bank fixed deposits, please break it and repay the loan, in full.

Damien: Currently I have a home loan from LIC for Rs 37,85,000 /-  for 20 years. I started the loan in Nov 2013 at interest rate of 10.35% fixed for 24 months , latter for floating. In Jan 2016 the rate of interest changed to 11.45% which I am currently paying. I informed LIC regarding this raise but did not receive any explanation. Again recently when I asked LIC, they informed me that LHPLR based on my sanction letter has not changed and remain 14.20 minus 275 bps (14.20 – 2.75). After reading LIC ad last week, listing reduced interest rates, I enquired from LIC and was told that the rates are for new loans. They offered me to rewrite the loan at 9.65 % for a fee of Rs  1150 .I need to know whether the above rates of LIC are correct. I enquired with Axis and SBI banks. Axis offers 9.2 % and SBI offers 8.75 % , total take over charges amount to Rs 41,000 /- approx. Please advise me whether bank offers are better than LIC.

Surely bank offers are better than your current terms with LIC Housing. Look at Bank of Baroda – at 8.35%  they are very attractive in today’s market. Keep looking and take the best deal.

Mansi Sawant: I had taken a loan of 18.5 lakhs back for buying a flat in Mumbai suburbs and currently my outstanding is 17 lakh for which I pay 20,360 per month. Can I invest the 7 lakh what I have in mutual funds and do a SWP to get help in EMI. If yes, which mutual funds will be the best for according to current scenario? My 2nd thought was should I sell my property and invest the amount left after paying the loan in mutual funds and purchase later in near future like approximately four years from now with the gained profits.

If you do not know how to invest, you should use the Rs. 7L to repay the loan and reduce your interest costs. Go to a professional investment consultant and with his help you could invest the Rs. 7L clearly with a 14-20 year view on your investment too.

Manu: I am buying a property with loan amount of 39 lacs. My salary is Rs 80,000 a month.  I will be aiming for 15 yrs loan tenure. I have an existing car loan and the tenure is 5 yrs. I am paying an EMI of Rs. 10,500/ month. My other investments include SBI PPF-Rs. 60000/ year and LIC policies worth Rs. 56000/ year. I have cash worth Rs. 10 Lk in FD that I want to invest elsewhere. How can I manage investments and which is the best possible way to invest Rs. 10 Lk which can be used to repay the loan amount in 5-10 years.

Use your FD to repay the car loan first. No other investment can ever give you a return greater than you home loan. Go to an investment professional and do a SIP in a good fund from a good fund house.

 Nagpurkar: I am planning to avail a home loan for buying 2BHK flat in Pune. My current CTC is Rs. 5.5 Lk and my wife’s CTC is Rs. 4.10 Lakh. How much amount of loan can we avail from the bank?

Assuming that your take home is about Rs. 55,000 per month, you will get a Rs. 18L home loan assuming that you have no other PL or car loan or any other regular payment.

Iyer: Iyer has a home loan for `5.50 Lacs as of now (it was 17 lacs 10 years ago and has been reducing my liability by prepayments). For FY15-16, I am losing out of Interest exemption of `2.50 Lakh as annual interest is around `70,000. Principal figure along with PPF contribution of `20,000 manages 80D. He has the capacity to repay the above home loan in full but if he says that if he does so, he would miss out on principal and interest exemptions. So he asks us what he should do. His tax burden is absolute high because of the above. Another home loan is for `11.95 lakh but since possession is after one year, he is unable to consider the EMI component in IT calculations. Does he have to repay in installments and wise to reduce his liability? Again, if he does so, next year he would be falling short of IT exemptions.

If you have your own money you should not borrow – the tax break does not matter. Tax break under 80C makes sense, but the interest payment as a tax deduction does not make too much sense.

Karan: I plan to borrow `39 lakh with a15-year tenure to buy a home. I earn Rs. 80,000 and pay EMIs of Rs. 10,500 on existing loans. I have `10 lakh surplus, how can I use it to pay off my loan?

Take a lesser loan!

Dinesh: When an individual repays old debts, banks do not update our CIBIL score. What can be done? How can I update my CIBIL score once I repay my loan?

Banks have to deal with CIBIL. You can write to Cibil and show them the discharge of the home loan, that’s the best for you to do.