Buying a house is one of the biggest and most important financial decisions someone makes. Even if you avail a home loan from a bank, the down payment is still very high. Due to quick disbursements, it has become easy to apply for a home loan. Furthermore, Diwali brings the extra perks of great offers by real estate builders especially on residential properties, as well as lower home loan interest rates. With the implementation of the RERA Act in 2016 and easy EMIs, consumer confidence has been boosted, and this festive season is a good time to go ahead and buy your dream home. If you’re looking to take a home loan, here are a few things to bear in mind.
Credibility of the property
Before you finalize on the house and apply for your home loan, thoroughly research the builder’s credibility, the track record of past projects and things as such. It is advisable to have a good lawyer look through the property records. For projects that have been approved under RERA. you can log onto the RERA website for all the relevant and required information.
Interest rates on home loans and associated fees
Banks and other financial institutions offer enticing loan rates or flexible payment plans in order to enable clients to invest in real estate. From quicker approvals and waiving processing fees to lower home loan interest rates, Diwali is the ideal time to get a home loan to buy a house.
Find out the home loan interest rates being offered by multiple banks and housing finance companies. You may also want to think about and determine whether you want to avail a home loan with a floating or a fixed rate. This is important to ensure you get maximum benefits of home loan.
Home loans, like any other loan, comes with a plethora of associated fees and charges, the processing fee being the most common. Look for a bank or housing finance company that offers the most reasonable charges.
Tenure and EMIs
Loan tenures widely depend on the retirement age. Most lending institutions offer a tenure of up to 20 years, some even extending to 30. One must remember that longer the tenure, higher will be the interest paid out.
It is advisable to have an estimate of the EMI one can afford to pay on a monthly basis. EMI would depend on the home loan amount, its tenure and the initial down payment. The higher the initial investment, the less the value of the loan, resulting in a lower EMI.
Tax benefits and subsidies
A deduction of up to Rs 1.5 lakh on the principal portion of the EMI for the year is allowed under Section 80C. Furthermore, the interest portion of the EMI paid for the year can be claimed as a deduction from the total income of up to a limit of Rs 2 lakh in accordance with Section 24.
The Government declared a CLSS grant under PMAY, which are applicable for first time home buyers. One should verify whether they comply with the stated requirements in order to allow use of the subsidy value.
Buyers must ensure, at the time of signing the application for a home loan as well as disbursement papers, that all documents are correctly filled out in all respects. Sign nothing without thoroughly verifying the contents. The cheques requested by the lender must be properly filled and no blank cheques should be given to the lending institution.
It is advisable to apply for insurance to cover the home loan amount. Many lending institutions provide the option of insurance with an added cost. It is a diminishing term plan where the duration of the cover declines as a result of the repayment of the loan.
Deals on home loan in the festive season can allow you to shop more than your means, so don’t forget to consider interest rates, tenures and fees as well as the legality of properties. These variables will dictate your monthly instalment, which you will have to pay even after the conclusion of the festivities. It is therefore necessary not to be sidetracked by the offers and to choose the right festival loan: one that fits your needs. So, take advantage of the opportunity to buy your dream home and create whatever future you want with it.