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Old 20th January 2010, 16:00   #196
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Engineers may be able to better comment on this.
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Sort of like this quick image I created
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sound pressure level (intensity) is inversely proportional to the square of the distance from the source

the best way to reduce SPLs is by haivng a diffuser or absrober between yourself and the source of the sound.

The most common of these are trees. The leaves of trees absorb the sound waves and convert the kinetic energy into heat and at the same time they diffuse the sound waves in random directions.
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Old 20th January 2010, 16:03   #197
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Builder is right to some extent.

Adding your father as co-applicant would make this loan complex. Reason is beyond retirement, EMI would be a very high percentage of income. This is about EMI that would be paid by him.

This would trigger bank's systems.

You can explain things and sort this out with branch manager.

He/She can solve this in multiple ways:

1. Give option to your father to pay up outstanding at retirement using proceeds from PF / other investments (baloon payment)
2. Step down EMI at age of retirement
Sorry i think there is gap in your and my understanding. The builder says that Bank will give me the loan without any issues since i meet all the eligibility criteria myself. EMI would be approx 30% of my current slary with no other outstanding loans either. BUT, if i add my father as a co-applicant (reason is that i want to make im the co-owner since in future he might help me prepay the debt after selling our old house), my loan tenure would be decreased to 10 yrs from 20 yrs. Even though my father would not be paying a single penny towards EMI/Down payment. I do not want the banks to consider *his* income at all, since mine is already sufficient.

Last edited by DCEite : 20th January 2010 at 16:14.
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Old 20th January 2010, 16:08   #198
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Can a co-borrower who is not salaried (retired and getting pension) reduce the tenure and loan eligibility of the main applicant even when the main applicant's salary alone meets the loan eligibility?

This is what the builder is telling me, that there is no problem if i take the loan singley, since the eligibility criteria are met (salary, from 16 etc.), However he says that if i make my father the co-applicant my loan tenure would decrease to 10 yrs since my father is 60 right now and HFCs consider only 10 yrs of pension life. Isn't this ridiculous, since it would be me who is paying the EMI and my salary *alone* meets the loan criteria comfortably ! Infact i would think that adding a co-applicant who is getting atleast something (pension) should actually make my case stronger ?
Sorry got confused.
The builder might have thought that adding your dad will get you the loan amount + the surplus above the emi. So the net go towards the emi will be more thus bringing the loan tenure.He might have thought like this.But ask the Bank if they can take the pensioner as co-applicant. In the form you have to mention how much % you and your dad will be giving as emi.
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Old 20th January 2010, 16:10   #199
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Sorry i think there is gap in your and my understanding. The builder says that Bank will give me the loan without any issues since i meet all the eligibility criteria myself. EMI would be approx 30% of my current slary with no other outstanding loans either. BUT, if i add my father as a co-applicant (reason is that i want to make im the co-owner since in future he might help me prepay the debt after selling our old house), my loan tenure would be decreased to 10 yrs from 20 yrs if i take the loan alone. Even though my father would not be paying a single penny towards EMI/Down payment. I do not want the banks to consider *his* income at all, since mine is already sufficient.
DCEite,now we got it. Yes you can reduce it by making your dad as co-applicant. but ask the bank guys once.
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Old 20th January 2010, 16:24   #200
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Even though my father would not be paying a single penny towards EMI/Down payment. I do not want the banks to consider *his* income at all, since mine is already sufficient.
Here the co-applicant is not playing an active role. So, decisions based on the co-applicant are irrelevant. If your father is declared as co-applicant who will also pay EMI, then what your builder says might be true. But since it is not so, I'll once again say its a false claim.

But why is builder bothered about the loan? He's got nothing to do with your tenure/EMI. He gets his part from the bank and then you will be the sole contact for the bank for the loan and anything related should be sorted out by you and the bank.
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Old 20th January 2010, 16:41   #201
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Can a co-borrower who is not salaried (retired and getting pension) reduce the tenure and loan eligibility of the main applicant even when the main applicant's salary alone meets the loan eligibility?

This is what the builder is telling me, that there is no problem if i take the loan singley, since the eligibility criteria are met (salary, from 16 etc.), However he says that if i make my father the co-applicant my loan tenure would decrease to 10 yrs since my father is 60 right now and HFCs consider only 10 yrs of pension life. Isn't this ridiculous, since it would be me who is paying the EMI and my salary *alone* meets the loan criteria comfortably ! Infact i would think that adding a co-applicant who is getting atleast something (pension) should actualy make my case stronger ?

1. Loan tenure depends on the bank's discretion.
2. Banks can provide for a longer period of repayment than what your salary warrants. (Like in you are capable of paying 10K per month, but choose to repay only 5K, thus doubling the loan tenure).
3. There is a difference between co-obligant and a guarantor

If all you want is his help in [p]repaying the loan, why your father should be made a co-owner of the new house? IF he has already sold a house, this is understandable, since he can claim deductions for capital gains on the sale proceeds, to the extent he actually spends for buying this house. If your father''s house is not sold yet, what is the benefit of making him a co-applicant? Co-obligant means he is a joint owner in the new house.

A guarantor can can repay the loan if the borrower (you, in this case) commits a default.

IMHO, from tax savings POV, you may be better off buying a separate house / apartment in case he sells his house, and invest the remainder in capital gains bonds.

Edit:- considering his age, at least some banks may not want to have your father as a co-owner of the new house.

Last edited by BaCkSeAtDrIVeR : 20th January 2010 at 16:44.
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Old 20th January 2010, 17:54   #202
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Sorry i think there is gap in your and my understanding. The builder says that Bank will give me the loan without any issues since i meet all the eligibility criteria myself. EMI would be approx 30% of my current slary with no other outstanding loans either. BUT, if i add my father as a co-applicant (reason is that i want to make im the co-owner since in future he might help me prepay the debt after selling our old house), my loan tenure would be decreased to 10 yrs from 20 yrs. Even though my father would not be paying a single penny towards EMI/Down payment. I do not want the banks to consider *his* income at all, since mine is already sufficient.
Not sure how to explain this. This is not about eligibility. This is about payment tenure. Tenure can not go beyond retirement. It it does, then branch manager has to approve an exception.

This means some additional work because of which loan approval would take more time.

Try applying to some bank from where you DO NOT intend to get loan (E.g. ICICI). That would make it clearer.
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Old 20th January 2010, 19:15   #203
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Not sure how to explain this. This is not about eligibility. This is about payment tenure. Tenure can not go beyond retirement. It it does, then branch manager has to approve an exception.

This means some additional work because of which loan approval would take more time.

Try applying to some bank from where you DO NOT intend to get loan (E.g. ICICI). That would make it clearer.
Ok, so what i understand is that tenure will be calculated based on whichever co-applicant's remaining working life is *lower* (even if that applican't EMI and downpayment contribution is to be zero). Is that correct?
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Old 20th January 2010, 22:29   #204
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Ok, so what i understand is that tenure will be calculated based on whichever co-applicant's remaining working life is *lower*
Yes that is the usual practice.

But if you happen to deal with a sensible manager, they will be able to sort this out in a single meeting. And loan will be be sanctioned based on your income and tenure.

As Builder said, this is a factor that you should keep in mind and prepare in advance.

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(even if that applican't EMI and downpayment contribution is to be zero). Is that correct?
Don't get that part. If he is co-applicant, his tenure would be same as total tenure of loan.
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Old 21st January 2010, 14:00   #205
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Even if you dad sells the house he will not pay the capital tax if he invests the same amount in buying one more house within 3 years.
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Old 21st January 2010, 14:08   #206
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But if he is co-applicant he can foreclose the loan without any tax implication, however if i am the only owner, i will use *his* money to foreclose the loan and that money which he would provide me would attract tax which i will have to pay.. right?
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Old 21st January 2010, 14:36   #207
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But if he is co-applicant he can foreclose the loan without any tax implication, however if i am the only owner, i will use *his* money to foreclose the loan and that money which he would provide me would attract tax which i will have to pay.. right?
AFAIK yes. You have to pay tax. Upto some amount from the house which wasold can be given to you as "gift", the remaining amount when it comes to your a/c the taxman will become alert and sometime later might ask the source,taxreceipt etc.
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Old 21st January 2010, 20:22   #208
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But if he is co-applicant he can foreclose the loan without any tax implication, however if i am the only owner, i will use *his* money to foreclose the loan and that money which he would provide me would attract tax which i will have to pay.. right?

Here is a flow chart for you. Your dad need not be a co-applicant; only a guarantor for your loan.

1. YOu take loan, start repaying it regularly.
2. Wait till the time you want to fore-close.
3. Deliberately commit a default. Ask the bank to send you and the guarantor (dad) some notice inw riting.
4. Your dad pays the loan on your behalf.

Bank happy. You happy. Dad happy. Taxman happy. The legislator will of course, find some means to change the law. :-D
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Old 21st January 2010, 20:59   #209
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Bank happy. You happy. Dad happy. Taxman happy. The legislator will of course, find some means to change the law. :-D
All that and the credit rating too goes for a toss....
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Old 21st January 2010, 22:56   #210
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But if he is co-applicant he can foreclose the loan without any tax implication, however if i am the only owner, i will use *his* money to foreclose the loan and that money which he would provide me would attract tax which i will have to pay.. right?

No, gifts between blood relatives DO NOT attract gift tax. For others, it applies above certain amount (probably 30 or 50k).

Talk to some CA to get more details on tax.

BTW, "foreclose" means last stage of loan default
Foreclosure - Wikipedia, the free encyclopedia


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Originally Posted by BaCkSeAtDrIVeR View Post
Here is a flow chart for you. Your dad need not be a co-applicant; only a guarantor for your loan.

1. YOu take loan, start repaying it regularly.
2. Wait till the time you want to fore-close.
3. Deliberately commit a default. Ask the bank to send you and the guarantor (dad) some notice inw riting.
4. Your dad pays the loan on your behalf.

Bank happy. You happy. Dad happy. Taxman happy. The legislator will of course, find some means to change the law. :-D

Would not work here

From Bank's POV, it would make more sense to sell the house since value would have appreciated by that time. And outstanding amount would have reduced.

BTW in most Govt banks and private banks there is major racket for foreclosure, those with connections get these homes at reates much lower than market and bank employees get there "cut" in cash.

Say value of home is : 60 lakh
After 7 years, loan outstanding is : 30 lakh
Market price is : 90 lakh

Now, loan is foreclosed.

Bank employees would rig the process to sell this home for 64 lakh.

This way bank gets its money back and ecosystem (recover agent, lawyers, buyer) send "cut" in cash to employees.

Last edited by NetfreakBombay : 21st January 2010 at 23:05.
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