How to Find the Best Home Loan Deal

Find best home loan deal

If you dream of buying a property, you're not alone. But then, you don’t have the cash to give wings to your dreams. There are over fifty lenders in India who may look forward to give you a Home Loan deal. The competition amongst home loan lenders is getting aggressive. But then, with so many options at your hand, whom do you choose?

Last month in May, several top lending institutions had reduced their home loan interest rates and are expected to lower them further, given the push to the housing needs in the country.

Let us check out a couple of things that you need to ask your lender so as to grab the best home loan deal.

1. Cheap is Not Always Good

   
   Make sure not to run after the cheapest rate of interest. Instead, you need to look for a competitive rate and concentrate on the different aspects of the loan. It is unwise on your part to think that cheapest is always the best deal to go in for. 

2. Floating versus Fixed Interest Rates

   
   Look for a floating rate of interest and don’t settle down for a fixed one even if it offers an attractive rate. It is because much later you will come to know about the hidden twists in fixed products. Most of us usually ignore that there's a foreclosure penalty valid within the fixed term. In addition, you will also find that the margin alters after no sooner than the fixed tenure comes to an end, in case the offer rate was for teaser period. 

3. Regular Reducing Balance versus a Monthly Scheme

   
   Make sure you choose a lender who provides regular reducing balance and doesn’t stick to the monthly scheme. It will not create any huge difference unless you make plans for a partial repayment. On the other hand, if you settle down for a monthly reducing balance plan, then even if you close an amount partially in between two EMI dates, they will consider the repayment only from the following EMI date. This in turn will force you to pay interest even on the repaid sum for those particular days. 

4. Make Unbiased Decisions

   
   Don’t judge a situation with your previous experience with some other product, or what your friends, relatives & colleagues have been through lately. You should remember that this is finance, a simple mathematical product, hence all you need to do is do your math & make decisions accordingly. 

5. Read Reviews Online

   
   Make sure you go through the online reviews carefully. However, it is seen that 99% of them are otherwise motivated. You’ll come to know that people who are badmouthing lender possibly use dummy ID-s like lisahayden, kingpin, bigboy, greatguns, among the others. So prior to considering their comments make sure to check the IDs they've used thoroughly.

6. Contact your Existing Financial Planners

   
   Your bank relationship manager, wealth manager, tax-planner, chartered accountant, and finance controller in office will be of immense help. Make sure to get their assistance to reach the best mortgage broker.

7. Looking for a New Age Product

   
   Look for new-age product that will help you curb your expenses. Look for standard home loans that offer surplus funds and take the loan for tax-savings or clearing off debts. These days, borrowers have different need instead of simply borrowing for the need of money.

8. Read the Offer Document Carefully

   
   Make sure you check the papers thoroughly; after all you are getting into a long-term relationship. It would be unwise on your part to choose the first lender that approaches you or offers you the lowest rate of interest. Make sure they offer various services such as provisional amortization, tax certificates, documents, part closure solutions, and decrease in the tenure/EMI after you have made a partial payment. Do not compromise on the facet of post-sales service. 

Take your time and choose a property from any of the top real estate builders. And with a professional lender at your end, you know things will be absolutely fine at your end

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How to Save Tax on your Home Loan?

Owning a home is a matter of pride for most Indians. For majority of the people, it is a long cherished dream. However, considering the constant increase in real estate property prices, it is not easy for everyone to purchase a house exhausting all the savings. Thus, most people go for home loans to turn the process of home buying easier on the pocket. Getting a home loan is no more difficult with banks and several financial entities offering such loans on easy clauses. Moreover, one of the remarkable plus points of getting a home loan is that it helps you save tax. By getting a home loan, you become eligible for tax rebates under Section 24 (b) and Section 80 (c) of the Income tax regulations. Whether you are planning to 2 BHK flats in Lucknow or something larger, it would be wise if you assess your capability to repay and sustain the payments for a long period of time.

Tax Benefits Estimation 

Under Section 80 (c), on principal repayment, you will become eligible for a tax deduction up to Rs. 1.5 Lakh. Moreover, under Section 24, deductions are allowed on the interest of the loan you have acquired. For a self-occupied property, this is restricted to Rs.2 lakhs. On the other hand, for a property that you have offered for rent, you can claim unlimited amount of interest as deduction under Section 24.

What Should be Done for a Self-occupied Property? 

According to the I-T Act, the total limit under Section 80 (C) permits a total deduction of Rs.1.5 Lakh, no matter how much interest is paid. But, you should be careful while requesting for a loan as it will save considerably on your tax outgo.

Opting for a Joint Home Loan May Be Beneficial 

Whether you are planning to purchase 2 BHK flats in Lucknow or apartments bigger than that, you will be able to enjoy huge benefits by opting for a joint home loan. You will not only be able to share your debt-burden with your co-borrower but at the same time, will be able to request for a higher amount of loan since the income of your co-borrower will be taken into account. From taxation perspective, a joint home loan is better as under Section24 of the Income Tax Act, the co-borrowers are eligible to claim tax deductions against the repaid interest and under Section 80 (C) against the repaid principal amount. Each co-borrower will be able to enjoy tax benefits proportionately with respect to the interest and principal paid in a financial year. 

Remember, the above mentioned tax benefits can be enjoyed only after you get the possession of your property. This will not be applicable in any way for a property which is still under construction. Again, if you are already bearing EMIs for a property that is under construction, you will not be liable to claim any deduction for the principle repayment until the completion of the construction work. The advantages of tax deduction can be availed for the interest component but just from the year of construction completion. In spite of this, you will be able to claim for all the interest paid during the years of construction.

Why Don’t You Offer Your Property on rent? 

In specific instances, people choose to stay in a rented property even after buying a property with a home loan. Specifically when your workplace or your kid’s school is a bit far from your newly-bought apartment, you may choose to stay in your rented house. In this case, it would not be wise to keep your property vacant but offer it for rent. In this instance, according to the I-T Act, irrespective of whether you have rented a house or not, the annual rent will be entitled to a standard deduction of 30% which is much more than the interest paid on a loan. For such a property, you need to pay tax on the deemed income you extract from the property. Know that no limit is there on the amount of interest that can be claimed as a deduction. Looking from this perspective, it is better to offer your property on rent rather than keeping it vacant. 

Browse through the blog to know how to save tax on your home loan. This blog will be useful for those planning to get loans for home purchase.

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