Home Loan Benefits ?/https://mortgageloancreditcardinsuranceinvestmentoffer.in/

 


However, the availability of various benefits on a home loan is one of the things that work in favour of the home loan borrowers. Below we will highlight the major home loan benefits.

A home loan refers to a credit option taken up by borrowers to finance their dream home. With home loans, an individual can borrow the big-ticket amount from a financial institution at a particular interest rate, which is supposed to be repaid through EMIs for longer repayment tenures going up to 30 years. Note that in home loans, one is allowed to borrow funds of up to 75% - 90% of property’s value based on the loan amount. The remaining amount needs to be financed by the home loan borrower in the form of a down payment amount.

Home Loan Benefits

Tax benefits

 One of the crucial home loan benefits of taking up a home loan is an income tax deduction that one can claim on their interest or principal repayments. You can claim up to Rs 2 lakh on interest repayments under Section 24 B and up to Rs 1.5 lakh on principal repayment as per section 80 C.

Availability at lower rates

Home loans as secured credit options are available at lower rates with interest rates beginning from just 6.65% p.a onwards. Banks & HFCs are offering lower rates of below 6.75% p.a. are Punjab & Sind Bank, State Bank of India, Kotak Mahindra Bank and LIC Housing Finance.

Availability of longer loan tenure

 Unlike various other credit options, home loans being a big-ticket credit option, are available at higher loan tenures that go up to thirty years. Due to the availability of longer tenure, one can choose their loan repayment tenure based on their repayment capacity.

Most Popular Tax Benefits on Home Loans Available in India?

Home loan is one of the biggest tax-saving credit options owing to the availability of various tax deductions available as per Section 80 C, 24 b, and 80 EEA of the IT Act. Altogether, an eligible borrower of home loan can claim an overall tax deduction of nearly up to Rs 5 lakh wherein Rs 1.5 lakh deduction is allowed on principal repayments as per Section 80 C, Rs 2 lakh is allowed on loan interest component as per Section 24 b and Rs 1.5 lakh deduction is allowed on loan interest component as per Section 80 EEA if one meets the stated eligibility criteria.

When Should You Buy a Home Using Your Own Money?

Owing to the rising housing and property prices, owning a home by paying the entire amount is near to impossible for many. As an outcome, individuals opt for the home loan option to not just avail their dream home earlier but also make most of the available home loan benefits.

Build substantial corpus for home loan down payment

As the RBI has allowed the lenders to fund 75% to 90% of the cost of the property through a home loan, applicants of home loans require to contribute the remaining cost of the property from their own pocket as margin contribution or down payment. The ratio of home loan amount and home loan borrowers contribution from their own pocket is referred to as the LTV ratio. Though most home loan applicants prefer choosing higher LTV ratios, opting for a higher down payment for them would be more beneficial. They are choosing a lower LTV ratio results in a lower home loan amount, which helps at lowering the overall interest outgo incurred for property purchase or construction. As a lower LTV ratio lowers the lender’s credit risk, choosing the LTV ratio enhances the home loan approval chances at a lower rate of interest. However, one should not make a higher down payment by compromising on their contingency fund, or those investments particularly meant for achieving important financial goals. Doing this may impel one to take up high-cost credit options to mitigate financial goals or meet instant monetary crunch in case of financial exigencies.

build a higher credit score

 A credit score is an important parameter factored in by home loan lenders when assessing the applicants for home loans. Applicants with higher scores of 750 or more have an increased probability of availing of home loan approval. Many lenders of home loans even provide preferential rates to the ones with higher scores.

Home loan EMI to your emergency fund

Uncertainties like job loss, illness, accident, disability etc., can massively affect your repayment capacity for loans. Failure to service home loan EMIs on time incurs heavy penalties and even adversely hampers your credit score. On the contrary, redeeming your investment for repayment of your EMIs for a home loan can morbidly damage your financial health. One of the ideal ways to ensure home loan repayment in such uncertain events is to add in the projected EMI for a home loan of at least six months to your emergency fund.

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