This is with respect to your article on bridge loans in The Hindu-HABITAT (January 19) which will be useful for many readers. Till now, we were not aware about this kind of housing loan.
I am the owner of a 2-BHK flat in Yelahanka which is 11 years old. I would like to sell this flat due to some personal reasons and go for a 3-BHK in the same apartment complex.
After reading your article, I have decided to approach an HFI for a bridge loan. My questions are:
1) Can I get the same Income Tax benefits as in the case of normal housing loan?
2) Which are the banks and housing finance institutions offering this bridge loan?
3) Is a bridge loan given for only new property or for buying any old apartment like in my case?
4) How will the sale agreement be made with the owner in the case of old property?
5) If I am not able to sell my 2-BHK for any reason after obtaining the bridge loan, is there any provision to convert it into a normal housing loan?
Balaji Rao replies:
1. Bridge loan-related benefits are not defined precisely in the IT Act. Since these type of loans are only “convenience” loans they may not get the same benefits.
Remember that the loan tenure here is only for two years unlike a normal long-term loan.
2. All banks do not offer this facility, only select banks and branches do. I am sure Vijaya Bank offers this loan but you may have to check for the specific branches of this bank.
3. There is no restriction of old or new apartment for such loans, but the discretion lies with the HFI.
4. The sale agreement you would enter into would be as per the normal agreement.
5. Yes, you have the option to convert your bridge loan into a normal loan
Please visit a bank or HFI and get full clarification on this loan since the policies could change from lender to lender.