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Ask Us: Harsh Roongta on loans

You will find it very difficult to get a home loan from any financial institution with your existing personal loan and credit card dues.

Written by Harsh Roongta |
May 2, 2011 3:45:30 am

I am unable to get a home loan,as my outstanding liabilities — credit card dues and personal loan together — amount to about Rs 1.5 lakh. Please advise how to manage my dues and avail a housing loan.

—Ranjit Singh,Chandigarh

You will find it very difficult to get a home loan from any financial institution with your existing personal loan and credit card dues. If the amounts are not overdue (just due) then it will only impact your loan eligibility and the lender will calculate the eligibility based on the existing outstanding amount. If you do not have any movable collateral security of enough value,you will need to postpone your plans to buy a property. Please approach a debt counselor to discuss how you can build your credit history.

I want to apply for a home loan. As I can not afford a regular EMI,could you give me the details about pre-EMI option?

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—Sanjay L Rao,Chennai

Pre-EMI is a simple interest payable on a loan taken for an under-construction property,which the bank may offer. In case of a ready-to-move-in resale or new property,a regular EMI will be payable immediately and you do not have the option of pre-EMI.

What are the occasions when a credit card application gets rejected?

—Archana Puran Singh,Mumbai

Before issuing credit cards or for that matter any credit facilities,banks normally obtain the credit report of the applicant from the Credit Information Bureau. The probable reason for your bank’s refusal to give you a credit card could be adverse credit report. There may be other reasons for your bank to refuse you the credit card like not fitting into the income criteria for grant of a credit card. You are entitled to get the reason for rejecting your application from the bank. Ask for a formal rejection letter and if the bank refuses then you can complaint to the banking ombudsman.

How should I choose a loan tenure?

—Soma Paul,Kolkata

If the loan amount eligibility is a constraint,go for the longest possible tenure. Some banks allow 25 years,though most banks allow only up to 20 years tenure. The maximum tenure is also restricted by your age at the end of the tenure so as to ensure that your loan repayment ends on or before the retirement age. But even if loan eligibility is not a constraint,you should opt for the longest tenure possible if there is a no prepayment penalty option. This way you can retain the flexibility of low EMIs and at the same time you can pre-pay the loan whenever you have surplus funds.

— Expert is CEO,Apna Paisa For your personal finance queries mail us at expressmoney@expressindia.com

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