Home Purchase – Loan Disbursement Options & Provident Fund usage

POSTED BY Nitin G ON November 14, 2012 9:09 am COMMENTS (2)

I am planning to apply for a loan for an apartment under construction which will be ready in next 30 months. I have following questions:
1. I need only 60% of property value as a loan. As the payment to builder has to be made as per construction progress; should I use funds with me (40%) first than to go for loan disbursement? (This is my 2nd home; there is no loan on first home) hence thinking from income tax benefit perspective.
2. Can I winthdraw all of Provident Fund for Home Purchase? (My curent PF account is 4.5 years old; how ever I have transfered my earlier PF account in this which was 4 years old)
3. Can I get approval of loan now and start disbursementan year later?
4. Is there any penatly in case I pre pay the home loan?

Thanks,
Nitin

2 replies on this article “Home Purchase – Loan Disbursement Options & Provident Fund usage”

  1. Dear Nitin, what’s the update from you on the matter?

    Thanks

    Ashal

  2. Biswa Singh says:

    1. Anyways you have to pay initial 20% from your pocket so you are only left with 20%. So you can start the loan and get the tax benifit on the total interest paid.

    2. The amount that you can withdraw varies. For buying or constructing a house you are allowed to withdraw your basic salary plus dearness allowance (DA) for 36 months, or you and your employer’s share for 36 months, or the cost of construction, whichever is the lowest.

    3. Yes you can do that.

    4. No penalty for prepaying the loan.

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