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YOUR QUERIES: LOANS: If you stop paying EMI on home loan, you may be sued by your bank

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By Chaitali Dutta

I took a home loan to buy a flat in 2011, but have not got possession yet. I have been paying EMI regularly. Can I stop paying EMI?
—Arun Kumar Grover
There are two agreements here that are binding on the parties. The sale agreement is between the builder and the buyer. The home loan provider is another party to the loan agreement with the buyer. If the builder has not given possession to the buyers, they may approach the court of law, as a group, to appeal for justice. However, if the EMI is discontinued, the loan is in default and the CIBIL rating of the borrower suffers. The bank has mortgage rights to the proposed property and in the event of the bank not getting the valuation from there, there is a possibility of another litigation with the bank.

What is the maximum tenure of education loan? Can I get tax benefit for the entire tenure of the loan?
—Manoj Pant

Usually, the maximum tenure of an education loan is seven years. The tax benefit is the interest paid on the loan being reduced from the taxable income of the person paying the EMIs. If the parent is paying the EMI, he can claim the tax benefit. Once the student starts earning and pays the EMI, then the tax benefit may be claimed by them directly.

I have a home loan with HDFC Ltd. Now, I want a top-up loan. As I am expecting some money after one year, can I prepay then for the top-up loan?
—Bhavna
Yes, sure, once you have additional funds, you may go ahead and pay off in the loan account.

Should I opt for a home loan that is benchmarked to repo rate or opt for a loan from an HFC?
—Nirmal Sanadhya

My suggestion would be to go for a loan that is linked to the repo rate.

My daughter is a student and earns money through tuition. Can she opt for a car loan?
—Arti Sharma

For the vehicle loan, the borrower has to show the ability to repay by way of income proof. This is typically done by way of the last three years’ income tax returns for non-salaried income.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to [email protected]

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