Investing in your dream home is the most difficult decision of your life. This is the reason why your research should be done before you get into a long-term repayment commitment. The loan is obtained to purchase a property by offering it as a security. A home loan offers high-value funding at an economical rate for a long period of time. that should be paid through EMIs, after the competition of repayment, the title of the property is transferred to the borrower.
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Way to Claim Tax Benefits on a Home Loan
The easy and simple process of claiming a home loan is:
- Ensure that the residential property is in your name
- Calculate the total amount you can claim as a tax deduction
- Give your home loan interest certificate to your employer to adjust your TDS
- If you fail to follow these steps then file your returns
What are the Key Benefits of Home Loans?
Here are some important benefits of home loans:
- It is comparatively cheaper than a personal loan- In comparison to personal loans, the interest rate on home loans is often lower. This is due to the fact that home loans are typically secured, whereas personal loans are unsecured.
- Flexibility to choose a tenure: Most banks allow you to choose your home loan length, which typically spans from 15 to 30 years. The term you choose has a direct impact on the monthly EMI you pay.
- Home loan balance transfer: You can use this service to move your outstanding loan balance from one lender to another to take advantage of cheaper interest rates.
- Tax advantages: You obtain tax advantages on both the interest and principal you pay. A deduction of up to Rs 2 lakhs per year can be claimed for interest paid, while a deduction of up to Rs 1.5 lakhs per year can be claimed for principal paid.
Check types of home loans that are available from banks:
- Home loan for construction:
This loan is only available for the construction of a house and it is offered to those who own a piece of land.
- Home loan for purchase:
This is one of the most common loans available, this loan is for purchasing a residential property, whether it is a ready-to-move-in, resale home, or an under-construction home.
- Bridge home loan:
This loan is availed for those who are looking for up-gradation of their home to a bigger or better one. This type of loan helps you to meet the shortage of funds that arises because of the time lag between sale and purchase.
- Setup home loan:
This loan avails a bigger amount in comparison to a regular home loan.
- Balance transfer home loan:
This facility allows you to transfer your home loan from one to another for the purpose of taking benefit of a better interest rate.
What are Basic Document Requirements for a Home Loan?
Home loan applicants need to provide personal documents like a Pan card and Aadhar card, among other income-related documents, like bank account statements, employment/ business documents, like salary slip or profit and loss statement, and property-related documents.
List of documents required to apply for a home loan in India.
- Id Proof –
Passport, Voter ID, Pan, Driving License
- Address Proof –
Telephone bills/ Passport/ Bank Statement/ Passbook.
- Property Documents –
A copy of NOC from society, sale deed, allotment- possession letter, etc.
- Other Mandatory Documents –
- Proof of ITR (Income tax return),
- Salary Slip,
- Audited Financial Sheet (for self-employed applicants and professionals),
- Qualification Certificate (for professionals),
- Profit and loss statement (for self-employed applicants), etc.
Here are some key factors that you must consider before applying:
• Ensure your credit score must be good.
• Check if you can afford to pay monthly EMIs from your current income level.
• Research each and every loan option available before finalizing an offer.
• Choose a shorter tenure that’s convenient for you.
• Know the pre-payment terms of the loan and for the charges applicable.
• Ask all the quires from the lender for all the additional charges that apply to the loan.
• Lastly, read all the documents properly before signing.
Here are some factors that can help you improve your Credit score:
• You must have to pay all the dues on the time.
• Keep regular checking of your credit report.
• Optimize your loan tenure
• Maintain the right mix of loans
• Avoid too many loans
The moratorium period is the period when you don’t have to pay any EMIs on your loan. This facility is provided by the lender to help you to manage your finance properly and ensure that you don’t get much burden for finance immediately after taking a loan.
Pradhan Mantri Awas Yojana (PMAY) was Launched in 2015. It is a Government of India initiative that goal is to provide affordable housing for certain sections of society. The scheme targets construction of about 20 million houses at an affordable price by 31 March 2022.
Here are the key objectives of this scheme:
• To advertise affordable housing for the weaker sections of society.
• To construct affordable houses in partnership with the public and private sectors.
• To rehabilitate slums with the help of private developers.
• To offer subsidies for beneficiary-led individual house construction.
• Your age is the important factor that determines home loan tenure.
• Your income whether you are a salaried or self-employed individual.
• Higher the CIBIL score, the better the chances of loan approval.
• Your Employment/ Business type is also taken into consideration.