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Home Loan    

Home Loan Rates

Building or buying your dream home is one of life’s most critical investment decisions, and it needs a lot of preparation and implementation. Before deciding to invest in a house, several considerations need to be weighed. A step-by-step strategy on how to save money, determine if they want to go for a mortgage loan, reviewing their eligibility of home loan and comparing different home loan deals, etc., must be carefully planned by home buyers. While most buyers seem to get confused and emotional when purchasing a home, financial experts advise owners to do some reliable analysis and schedule the entire process practically. Hence, it becomes imperative to have a strategy while planning to build your dream house.

Before applying for a home loan, let us discuss some of the critical pointers and learn how you can financially plan the whole process.

  • Assessing the budget: The first measure to take is to determine the budget. You will still have to consider whether you want to purchase a constructed house or flat, or a fully furnished home. This is important because the terms and conditions for mortgage loans and construction house loans are different. The first thing prospective home buyers should do is to take a look at a few homes, compare home loan rates and then set a budget. Let’s presume you set a ₹ 50 lakh budget and plan to go for an apartment. The next step is to agree on the budget and the loan amount you would require.
  • See if you wish to withdraw from your PF: All EPF investors are entitled to use 90% of the PF balance to make a down payment to buy a home. Moreover, it is also possible to use the PF account to pay the EMI of a home loan. The money from this account can also be used to purchase a piece of land or to build a house. 
  • Tax advantages on home loans: A variety of tax benefits for people who take out home loans. Deductions can be claimed on the interest, the principal sum invested, registration charges and stamp duty fees. Up to ₹ 2 lakh deduction can be claimed for interest, and for principal, up to ₹ 1.5 lakh. As far as registration and stamp duty charges are concerned, the maximum exemption cap is ₹ 1.5 lakh. And in case of a first time home buyer, tax advantages for a sum of ₹ 50,000 is allowed.
  • Decide on the financing method: You will have to work out how you will fund the entire home purchase by setting a budget, deciding what kind of home you want and where you want it. Check the loan amount you need and how much you’ve got in your wallet. Before you pick a bank or financial firm for the loan, the first thing to do is to check home loan rates, make a detailed comparison and select a low rate of interest.
  • Select the loan amount: Indian banks offer borrowers to avail 90% of the home price as a loan. For instance, if you plan to buy a flat for ₹ 20 lakh, the maximum loan amount of the loan you can get is ₹ 18 lakh, and the rest is to be borne by the borrower. Financial experts suggest financing at least 30 to 40 % of the overall expense by savings. It is prudent financially to commence the saving process at least five years in advance or at least two years to 3 years.
  • Check the EMI you can pay: The EMIs are another significant aspect to take into account. Check the household costs and other expenses you have to add each month. To learn and finalise an EMI amount, use a home loan EMI calculator.
  • Interest rates: The home loan rate will have a direct effect on the EMI and the cumulative cost of the loan. Be cautious of floating interest rates because of market volatility; they keep changing. Choosing a fixed interest rate is optimal, especially if the time for which you are taking out a loan is short to medium.
  • Look for a fine print:  To prevent any misunderstanding at a later stage, review all regulations relevant to arbitration, foreclosure and prepayment before applying for a home loan. Take a look at the delivery period and know whether you have to pay any processing costs before finalising.
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Before applying for a home loan, careful financial planning is essential, as this gives borrowers ample flexibility to meticulously prepare and organise how they intend to finance the entire purchase. Without some form of advance pre-planning, just making a rapid leap will lead to a lot of uncertainty and financial tension at the last minute.

Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.