Live Your Dream Property with Home Loans
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Live Your Dream Property with Home Loans

By siliconindia   |   Tuesday, November 12, 2013
Bangalore : A home loan helps you achieve your dream of having a home of your own and living a satisfied life. But if you are not aware of the financial and tax implications, a home loan can rob you of that peace of mind. A home loan can facilitate you to think of a beautiful home for which you cannot afford to pay at once on your own but the Equated Monthly Installments (EMIs) can stalk you for a long time. Although this mode of payment is costlier, banks are still seeing more and more takers as it rules out the big task of arranging the whole amount at one time. The real estate market is growing like never before. Home loans have boosted the growth of real estate sector by bringing the buyers and sellers together. The affordability has increased and it is encouraging more people to buy homes. The reduction of risk weightage on home loans and residential housing projects by Reserve Bank of India has further helped the people on both ends. The regulations which are being implemented are making the whole process comprehensive and transparent. The very first step for taking a home loan is to prove your home loan eligibility. Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable / surplus income and other factors like spouse's income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual's gross income and not on his disposable income. Once you fulfill the eligibility conditions, you are good to go. The tax benefits available on home loans bring down the effective cost of borrowing. The repayment of principal for a home loan, for instance, is eligible for a deduction of up to 1 lakh a year under Section 80C. This is especially useful for borrowers who are paying a huge EMI and, therefore, don't have too much to invest in other tax-saving options. But the icing on the cake is the deduction of the interest paid on the loan. Up to 1.5 lakh a year is deductible from the taxable income of the borrower under Section 24(b). There are a few factors which you need to be aware of while taking a home loan. Choosing the best home loan lender is important if we have to escape all the hassles that are linked to availing a loan. You should always finalize the property you want to purchase before looking for lenders that would be ready to finance your house. This is important because some banks lend for a property that is already furnished while others extend for a self constructed property or property that is under construction. Thus it is better to finalize the category of your property first and then look for lender options. It will help us to focus in a defined area and extract all relevant information before finalizing on the lender. One is always left in dilemma while opting between fixed and floating interest rate. It is always thought that a fixed interest rate means same rate throughout the tenure but sometimes it is adjustable after a certain period of time, provided which either your EMI amount or the loan tenure can increase. Thus it is better to clear this point in hand with your lender. On the other hand, if you are opting for the floating rate loan, make sure that your lender's floating rate has come down at least over the past two years. Market scenario should also be analyzed if you are planning to avail a floating rate loan as it depends on the economy's interest rate. Gone are the days when Indians used to think twice before going into debt. The growing consumerism has made Indians open to the idea of loans. Since banks are aware of the growing need of loans and in most cases the immediateness of it, which can work against the Indian consumer. It's important that a consumer does not settle for the very first loan he has been shown. This is because, in most cases this would not be the best deal available with the bank. There is a huge possibility that a more expensive deal has been showcased by the bank, to take advantage of the situation. However, it's important to go through the whole pile and find out the best deal for yourself, than to let another individual decide for you. Considering these factors can ensure that you get the best deal and then you can start living your dream

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