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Buying a home that meet our desires as well as fit in our budget is becoming a dream. It brings a feeling of an achievement for a life along with a big liability. It is difficult to buy a dream house entirely with our savings. Considering a huge amount for a long tenure, Home Loans offers a relief along with a lots of benefits, few of which are mentioned below (need to know the types of Home Loan).
Tax rebates are one of the primary benefits of home loans. There are two kinds of tax benefits one on the repayment of principal amount and the other is on the payment of Interest.
1 Principal payment allows the borrower to get a tax benefit on the actual amount borrowed from the Bank. Section 80C of income tax allows the deduction of 1.5 Lakhs along with insurance premiums, school fees etc. An extra advantage can be availed if the spouse becomes the co-applicant as it allows the tax benefit for both. This section does not include the rental properties.
2 Interest payment allows an individual a deduction of interest on the amount borrowed to purchase or construct a property. This falls under Section 24(b) of Income Tax Act and it is also valid for the reconstruction or the repair of an existing property. The upper limit of this amount is Rs 2 Lakhs and can be availed on residential properties.
Once the loan is fully paid and the borrower gets the complete ownership, it becomes an asset that can help to guard from future troubles. Asset is something that is owned and can provide cash when needed. New loans can also be acquired against the owned property. It supports the family and the finances as well. As we are aware that an house is an appreciating asset, our biggest investments become wealth in no time and proves to be the greatest asset. At the age of retirement a borrower can also get a reverse mortgage to fund the ongoing needs for income. & How to calculate the income eligibility for Loan
Despite of ups and downs in the interest rates of the Home Loans we end up with buying a house that we adore and where we can repay the loan with a comfort. Government banks along with Private Banks and NBFC’s offers a low rate of interest on Home loans. Female borrowers are privileged to get the Home Loans on a lesser rate of interest as compared to male borrowers. This also ensures the strengthening of women to have their own house. Mudra Homes opens the door to calculate and compare the interest rates offered by different Banks and NBFC’s that can help to decide the loan amount, tenure and EMI’s to pay the debts without any compromise on the other expenses.
Even if an individual is well off doesn’t mean that he have a good credit history. Taking a home loan gives an opportunity to create a credit history of the borrower. Home loan is linked with a physical asset, it shows the borrower to be a regular payer. A history of paying the EMI’s on a regular basis the lender is assured to know the borrower as a dedicated payer to repay the amount on time. The regular repayment of EMI will increase your credit score and hence proves your credit worthiness, which will help you in getting loans easily in future. Home loans helps to ensures that the borrower is enough responsible to manage his finances (to Know more How to Create a Good Credit History).
Before lending the amount the lenders carefully observes the papers of the property. Being a secured loan, the original property papers are used as a security for the loan. The property papers are verified to know that the property is clear, completely legal & marketable, free from all encumbrances and is dispute free. The loan is given to the right owner for the legal and valid reasons. Buying a property in an approved project by the Banks/ NBFC’s save a lot of time spent on the credit appraisal. Also the original property papers kept in Banks/ NBFC’s acts as a locker where the borrower is free from any hassle to lose them.
Before sanctioning a home loan, the lender will take an opinion on the present market value of the property. Valuations of the property are done by certified Independent valuer’s. In case of buying an existing property a technical clearance is required to estimate the market value of the property. maintenance, the age of property, level of construction, square feet and built up area, quality of construction, , the locality and special comments are the other points that are referred by the Banks to get the clear picture. This also helps the borrower to know the technical side of buying a property and hence help in his decision making to make an investment.