We have purchased an under-construction flat jointly with my son and wife in September 2023, the agreement for sale I registered in November 2023 and stage wise payment has started. We have availed bank loan jointly. My wife intends to sell her flat for financing the purchase of the above house , but yet to get the buyer. Can we make payment for new house through the bank loan and lateron use the sale proceeds of my wife's flat for loan repayment?

Ans: I feel both answers are not pertaining to income tax act. You can check with Bank

Ans: Any bank or housing finance companies can provide you a loan. Please check all the loan requirements and paper work properly before taking up the loan. also, do not resort to any unauthorised lenders.

Ans: Your decision to buy a new house while selling your current one requires careful financial planning. The market price of your flat at Rs 2.25 crore offers significant value. However, delays in selling can create liquidity challenges. Let us explore how you can address this efficiently.

Using Your Existing Home as Collateral
Home Loan Against Property (LAP):
You can use your current flat as collateral for a loan. The loan amount depends on its market value, typically 50–70%.

Bridge Loan for Immediate Needs:
A bridge loan is designed for situations like yours. It provides short-term funds against your property until it is sold.

Loan Tenure and Repayment:
Bridge loans usually have shorter tenures of up to 2 years. Repayment can be done once your property sale is complete.

Factors to Consider Before Taking the Loan
Interest Rates and Costs:
Bridge loans often have higher interest rates than regular home loans. Compare rates from multiple lenders to get the best deal.

Processing Time:
Banks and NBFCs process these loans relatively quickly. Ensure you have all required documents for faster approval.

Loan Repayment Feasibility:
Assess your ability to repay the loan. Avoid over-leveraging yourself financially.

Market Conditions:
The time it takes to sell your flat depends on market demand. Delays may increase loan costs.

Alternative Options to Consider
Advance from Buyer:
If a buyer shows interest in your current property, negotiate an advance payment. This can fund the new purchase partially.

Temporary Family Loan:
If feasible, consider a short-term loan from family or friends. This option avoids high-interest costs.

Planning the Sale and Purchase Together
Price Your Flat Competitively:
Ensure your current flat is priced in line with market rates. A competitive price can help attract buyers faster.

Negotiate with the Seller:
Explain your situation to the new property's seller. They may allow a flexible payment timeline.

Seek Professional Guidance:
Consult a Certified Financial Planner to evaluate your financial position and strategy.

Tax Implications to Remember
Capital Gains Tax on Sale of Flat:
If you sell your flat, the capital gain will be taxable. If held for over 2 years, it qualifies for long-term capital gains tax.

Reinvestment to Save Tax:
You can reinvest proceeds from your flat's sale into another residential property. This helps you claim tax exemptions under Section 54.

Loan Tax Benefits:
Interest on loans for property purchase has tax benefits. Confirm with your lender about eligibility.

Final Insights
Your need for immediate funds can be addressed with a bridge loan or advance against your flat. These options provide liquidity without derailing your property plans. Evaluate loan costs and repayment feasibility carefully. Always aim to minimise financial risks and explore alternatives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment