Your Queries: Loans | Top-up home loan to be used for home extension/repairs only


By Chaitali Dutta

I plan to take a top-up loan against my existing home loan. Do I have to show any document for the end use of the fund taken as a top-up loan?— Abhishek Suman

The top-up loan is to be utilised for home extension or home repair. The end use of such a loan has to be house-related as the interest rate of such a loan is one of the lowest in the market. Only for loan against property, loan against deposits, or personal loan, the end use of the funds are at the discretion of the user. These loans, thus, are more expensive than a home loan or a top-up home loan.

My brother had taken a housing loan from HDFC Bank and he got a PMAY subsidy benefit. He died in September 2021. Now the bank is asking us to repay the PMAY subsidy on the grounds that our building has not received the occupancy certificate (OC). The building has a completion certificate (CC). What I should do?— Ratna Mohite

Refund of PMAY is not related to OC or CC. Since the beneficiary is dead, the unutilised subsidy has to be refunded.

I have a personal loan and a car loan. As I have some spare money with me, which loan should I prepay?— Naveen Kumar

The personal loan will attract a higher rate of interest. So pay off the personal loan first. Then if you still have surplus funds, pay off the car loan. Collect the lien removal RTO Form 35 in duplicate in addition to NOC and loan closure letter. Do the car loan closure by visiting the bank branch.

I want to take a home loan for Rs 12 lakh and apply for PMAY. I want to pre-pay Rs 3.5 lakh in the first year apart from the regular EMI to reduce the interest outgo. After the first year, I want to pay as per bank’s EMI. Is it possible to pre-pay like this?— Ajay Mishra

On approval for PMAY, your loan amount is reduced and consequently, your EMI is also reduced. In case you want to prepay, it will depend on your loan details. If you had also availed additional loan on non-subsidy on the property, your repayment will be reduced from the non-subsidy part. If your PMAY subsidy is on the entire loan amount, you have to refund the present value of the subsidy availed on the refund amount, for the remaining tenure of the loan.

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