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: Yes, this is a common approach for financing a new property purchase. Here's how it can work:
1. Financing the New House with a Loan:
• You can proceed with the bank loan you've availed jointly for the new under-construction flat. This allows you to make stage payments as required by the builder.
2. Using Wife's Flat Sale Proceeds for Loan Repayment:
• Once your wife finds a buyer for her flat, the sale proceeds can be used to repay the existing loan partially or fully. This will significantly reduce your monthly EMIs or even close the loan depending on the sale amount.
Things to Consider:
• Loan Agreement: Review your loan agreement to see if there are any prepayment penalties associated with paying off the loan early with the sale proceeds.
• Tax Implications: Selling your wife's flat might have capital gains tax implications. Consult a tax advisor to understand your specific situation and potential tax liabilities.
• Timing: There might be a time gap between taking the loan and selling your wife's flat. Be prepared to manage the loan EMIs during this interim period.
Additional Tips:
• Bridge Loan: If there's a significant gap between taking the loan and selling the flat, consider a temporary bridge loan to cover the interim EMIs. However, bridge loans typically have higher interest rates, so explore this option cautiously.
• Transparent Communication: Maintain open communication with the bank regarding your plans to use the sale proceeds for loan repayment.
By carefully planning and considering these factors, you can leverage your wife's flat sale to manage the loan for your new house purchase.

Best Regards,
K. Ramalingam, MBA, CFP,
Certified Financial Planner
www.holisticinvestment.in