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Submitted by: Anamika Verma
Buying a home is the ultimate dream for every Indian. But with property prices hitting the roof, youll need an additional funding source apart from your savings to buy a home of your choice.
A housing loan is your best bet; you not only get access to funds that can be repaid over a period of time at reasonable rates of interest, but also stand to gain income tax benefits.
Where can you get a housing loan?
A number of banks and housing finance companies are ready to offer housing loans at an attractive rate of interest. Of course, the rates charged by banks vary; and so do loan processing time, prepayment charges, and percentage of loan disbursal.
As a smart home buyer, its best to analyze the terms and conditions of each institution and choose the best housing loan that covers the most of the homes cost, offers low interest rates, and does not charge any penalty on prepayment.
Advantages of taking a Home Loan
Theres no doubt that an outstanding loan is a liability, but availing a Home Loan has its own advantages as well. Here are a few:
Keeps your savings intact
Property prices have skyrocketed recently so its pretty difficult to buy a home from your own kitty. By taking a Home Loan, you can reserve your savings for any exigencies like planning your wedding or meeting the cost your childs education. With banks and housing finance companies ready to offer you Home Loans at attractive interest rates, there could not be a better way to buy your dream home.
Offers you tax benefit
A housing loan gives you the dual benefit of owning an appreciable asset as well as allowing you to save a good amount on your income tax.
The interest that you pay on the housing loan is deductible U/s. 24 of the Income Tax Act. Furthermore, you also get a tax rebate U/s 88 on the principal amount of the loan that you repay in a financial year.
Benefits of fluctuating interest rates
By taking a Home Loan with a floating rate of interest, you can benefit in times of lower interest rates, allowing you to make prepayments and close your loan before the end of the term. By utilizing this interest rate fluctuation, you can conveniently bring down the repayment tenure.
Eligibility criteria for Home Loans
Banks have a set of rules to determine your Home Loan eligibility. The Home Loan criteria differ for every bank; and each has a set of guidelines to determine the amount of loan youre eligible for. If youre above 21 years and have a steady source of income, you can avail a Home Loan.
The tenure of the loan and your repayment potential are the key factors that determine the quantum of loan you will be approved for. Your credit score too has a bearing on how much loan you can get.
Once youve met the eligibility criteria, submit your proof of income and residence along with the approved blueprint of the home. If youre given the clear, funds will be at your disposal so that you purchase your property right away.
About the Author: Anamika Verma writes on various types financial loans and has a vast experience as a financial advisor. Her expertise on financial issues is well sought after and she is known for her in-depth knowledge topics such as debt management, liquid assets, mutual funds etc. She has written more than 1000 blogs on topics related to home loan.
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