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Prevailing Interest Rate scenario?

(A) - Floating Interest Rate: 10.00% - 12.00%
(B) - Fixed Interest Rate: 12.00% - 14.00%

How much do you pay every month?

On the basis of these rates, the monthly instalments for a housing loan of Rs 1,00,000 work out as follows:

Interest rate in %
  10.50 10.75 11.00 11.25 11.50
Term Years Rs Rs Rs Rs Rs
5 2149 2162 2174 2187 2199
10 1349 1363 1378 1392 1406
15 1105 1121 1137 1152 1168
20 998 1015 1032 1049 1066
25 944 962 980 998 1016

Other fees

Administration Fees: 0.5% or Rs 5,000.00 whichever is less plus Service Tax as applicable.

What security is required?

The loan would be secured by equitable mortgage of the apartment financed by the bank.

Maximum loan

85%-90% of the value of the apartment

Example Two

Mr X purchases a ready apartment in April 2006 for Rs 15,00,000. Fair rent is Rs 10,000 per month. He has taken a loan of Rs 15,00,000 at an interest rate of 10% p.a. from a housing finance company in April, 2005. The interest outgo on the loan for the financial year 2006-2007 is Rs 1,50,000. The principal repayment of loan during 2006-2007 is Rs 1,00,000. In addition, he makes the following expenditure in respect of the house property:

Municipal taxes: Rs 4,000
Repairs: Rs 2,000
Fire insurance premium: Rs 2,500.

The apartment is not let out and no benefit other than self occupation for residential purpose is derived from it. Assuming that the income of X from other sources is Rs 4,50,000, his Taxable Income and Tax for the Assessment Year 2007-08 will be

Computation of Tax Rs
Annual Value (as X has occupied the apartment for self-residence and no other benefit is derived, annual value of the property would be nil) NIL
Less: Municipal tax NIL
Net Annual Value NIL
Less: Deduction:
Standard deduction @ 30% of NAV Interest on borrowed capital:
(on accrual basis)
NIL

1,50,000
Income from House Property:
Income from Other Sources:
(-)1,50,000
4,50,000
Gross Total Income
Less: Deduction U/s 80C
3,00,000
1,00,000
Taxable Income 2,00,000
Income Tax 15,000
Add: Surcharge NIL
Add: Education Cess @ 2% 300
Net Tax Payable 15,300