Home Loan Planning Tips

With property prices touching new highs, it is almost impossible to buy homes anywhere in India with self-made savings. Hence, the buyers have no choice but to avail of credit facilities in the form of home loans. Housing loans are one of the cheapest modes of finance available in the market currently and offer several value-added services such as income tax rebates, ease of application, and transparency. In fact, applying for home loans these days has become extremely easy, simple, and convenient. All thanks to housing.com, an online property website that facilitates buying, selling, and renting of all kinds of realty assets across India. With housing.com, people can apply for loans either from the comforts of their homes or on the move through its revolutionary ‘Look Up’ app. Having said this, here are some essential realty planning tips that buyers must carefully consider before signing on the dotted lines:

Affordability factor

Affordability is one of the first things that buyers must take into account when availing of a credit facility. More often than not, people are driven by emotions during the home-buying process. However, the sentiments must be kept in check when taking such high-value decisions. The customers must think rationally and take the help of experts from credible sites like housing.com who can help with each aspect of the home-buying process. All of the factors associated with affordability must be carefully considered including:

  • Nature of job
  • Monthly income
  • Net expense
  • Home loan EMI
  • Other outstanding EMIs, if any, etc.

Interest rate cycle

Interest rates are also an integral part of home finance schemes. The users must carefully consider the interest cycle and as far as possible they must buy properties in a lower interest rate cycle. For example, the current period is most suitable for home buying. The interest rate over the last 12 months has gone down by more than 1%. This means that the pre-emi or housing loan EMI would have certainly gone down by a few thousand rupees making it an ideal time for new borrowers to purchase property and avail of home loan facilities. It is also the right time for existing customers to foreclose the loan. They do not have to do anything extraordinary. The existing borrowers can just keep their EMIs as is. This will result in a higher principal amount being credited towards loan repayment and the loan can be foreclosed before time.

Deciding on lender

The creditor is the most important part of home loan planning. The buyers must carefully analyze the pros and cons of lenders before finalizing the one. As of day, there are several creditors from housing finance entities to scheduled, private, cooperative, and public sector banks. Nevertheless, the decision must be made only by taking into account several factors:

  • Track record of the lender
  • The treatment meted out to existing customers
  • Type of products offered
  • Flexibility in repayment
  • Miscellaneous charges associated with home loans
  • Value-added services such as net and mobile banking, no minimum balance, overdraft facility, etc.
  • Customer service
  • Number of days to sanction the loan
  • The overall time required to disburse the credit
  • The market value of the lender, etc.

People must proceed with loan applications only if all of these parameters are satisfactorily met. If a lender does not meet the criterion, it must be immediately discarded and an alternate creditor should be considered.

Availing tax benefits

Last but not least, buyers must also consider availing of all kinds of tax benefits when buying a property with housing loan facilities. It is important to remember that all the taxes paid are eligible for deductions under Section 24(B) of the Income Tax Act. This means that people can save on their tax outgo up to 2 lakhs in a financial year by claiming home loan interest deductions.

Similarly, stamp duty and registration charges are also exempt from taxation as per Section 80C of the Income Tax Act. All these points must be taken into consideration while planning realty purchases through credit schemes. In addition, buyers must also pay attention to the tenure of their loan and as far as possible they should go for a longer repayment period so that EMIs are more affordable.

Altogether, home loan planning is a serious business and it requires careful consideration from all angles. The users can consult housing finance advisors from credible sites like housing.com to understand the market better before deciding on the same. Ultimately, it is important to remember that buying a property with the help of loans involves high risks, and hence adequate homework must be done before making any commitments. The aforementioned pointers should give prospective homeowners clarity about availing of loans for purchasing a property. It will not only help them make an informed decision but also prepare them for what’s next in the loan process.