With the rise in property prices, applying for a home loan is necessary to finance your dream of owning a house. However, most lenders cover only 80% of the value of the house. So, saving up for the down payment as well as ancillary costs related to stamp duty, registration and brokerage can be heavy on the pocket. In this regard, choosing the right home loan can minimise your financial obligation, giving you more convenience and allowing you to save more comfortably.
Here are some steps to manage your home loan effectively:
Choose a Competitive Home Loan Interest Rate
When you decide to take a home loan, it is very important to select a lender who offers low interest rates and good loan terms. Research the market to find out about the on-going home loan interest rate. This will give you a better sense about what you should opt for. Make sure to tally home loan offers by lenders according to their interest rate, charges and fees, additional benefits, and tenor.
You can use the home loan EMI calculator in this regard to toggle the figures for the amount, interest and tenor and calculate your potential EMIs in advance. Take your time and be thorough with your calculations and deduce the most pocket-friendly EMI figure. Do this as a compulsory exercise before taking a home loan as it will help you choose the best deal without any compromise.
Lenders like Bajaj Finserv offer Home Loan up to Rs.3.5 crore at nominal interest rates. With easy tenors of up to 25 years and innovations like the Flexi Hybrid facility, you can be assured of the best terms on your home loan. You can check your pre-approved home loan offer and get a step closer to your dream home.
Don't Miss Out on Tax Exemptions
According to the Income Tax Act, as a homeowner, you can claim tax deductions on your home loan. The home loan tax benefit is extended equally to both you and your spouse, in case both of you are enlisted as co-borrowers for the loan. So, if you are taking a home loan, plan in advance and avail tax exemptions in order to boost your savings.
Here, you can claim up to Rs.1.5 lakh paid towards the principal on your home loan in a year under Section 80C of the Income Tax Act. You cannot claim this benefit on under-construction properties. But, you can claim the amount you pay on stamp duty and registration as a deduction under this section. Moreover, you can also claim the interest you repay on your home loan for deductions under Section 24 of the Income Tax Act. If your property is self-occupied, you can claim an exemption of up to Rs.2 lakh on it, provided the construction of the property is completed within 5 years. In case it exceeds this timeline, then you can claim Rs.30,000.
Additionally, as a first-time homebuyer, you can claim a deduction of Rs.50,000 under Section 80 EE. However, to avail this benefit you must purchase a house that costs below Rs.50 lakh and for which the home loan amounts to less than Rs.35 lakh.
Try to prepay your home loan
Making regular prepayments on your home loan is a good way to save big. This is because with each prepayment, your principal amount starts to reduce. This, in turn, brings down the overall interest on your home loan. Your lender will offer you two options vide prepayments. So, either you will get to choose reduced EMIs or get to decrease the tenor for your home loan. Both ways, you benefit by saving more. Thus, it is good to use the home loan prepayment calculator to check how you can benefit from prepayment.
Also by prepaying your loan you not only reduce your debt, but also improve your credit score.
Armed with these tips, you can proceed to take a home loan from a lender who offers maximum convenience on your sanction. Keep these pointers handy to balance your borrowing and repayment journey with comfort.
(Nishant is a passionate blogger. He has a very diversified skill of amazing artwork like Card Making, Painting and Crafting. He loves keeping himself up-to-date with the news and happenings around. He is always open to learning and shares his experiences on Greetings of the Day.)