Since your dream house can cost you a fortune, it is not wise to use up all your savings and income for only buying or constructing your dream house. You should allocate only a part of your savings for this purchase, and the rest can be borrowed from a lender. Many banks offer home loans at affordable interest rates and an excellent Loan to Value (LTV) ratio. Like in gold loans, the gold is kept as a security with the lender, and the borrower gets up to 75-80% of the gold's market value as loan amount; similarly, banks can provide loan amounts up to 80% of the cost of the house. A Home Loan is a type of credit taken by the borrower to get the necessary funds to purchase a new place. The house/property is kept as security by the bank or NBFC until the loan tenure ends. The lender has property papers till the home loan amount plus the interest rate is repaid in full. An applicant can also take a housing loan to remodel or renovate the house as well.
Many public sector banks offer Home Loans at reasonable interest rates, like the Oriental Bank of commerce. The Oriental Bank home loan interest rate is one of the lowest in India, starting at just 6.95%. Oriental Bank of Commerce provides other products to its customers on a home loan that can be used not only to purchase a house but also for home construction, an extension of a house, or improvement of the house's interiors. The Home Loan amount ranges from Rs. 1 Lakh to Rs. 3 Crore, and can be availed for up to 25 years.
There are many perks and benefits associated with Home Loans and can be availed easily if you do the proper research beforehand and spend wisely. Some of these benefits are related to the taxes imposed on the house, while others are about the features of the loan -
Tax benefits: The government keeps introducing new tax reforms to motivate more citizens to buy homes by reducing the tax on the principal amount and providing tax deduction on Home Loan interest paid. According to Section 80C of the Income Tax Act dictates, a borrower can claim a tax deduction of Rs. 1.5 Lakh in a fiscal year. While for interest rates, this deduction can be up to Rs. 2 Lakh. These deductions can be enjoyed only after the construction of the house is complete.
Low-interest rates: Since a Home Loan is a long-term loan, as it can have a tenure between 10 years to 30 years, the interest rate charged is relatively low. It is not fixed over the loan tenure, and the borrower can benefit from the floating rate method. The interest rates usually start at 7%-7.5% per annum. Also, there are no prepayment charges involved with a Home Loan.
Longer repayment tenure: Out of all the types of loans, a Home Loan has the most extended term and can be repaid over 30 years. The burden of high monthly EMIs can be decreased by extending the tenure.
Tax benefits on second property: Under Section 24B of the IT Act, if you own any other property, then you are qualified for claiming a deduction for the entire amount of the interest paid.
It is better to own a house and pay its EMI than to live in a rented house and pay the high rents.
Conclusion:
Hence, buying a home becomes much easier and more convenient through the funds from a Home Loan. The lenders provide various benefits while sanctioning the loan, and the lower interest rates and longer tenure do not affect your daily expenses or long-term savings.
Also read:- Smart ways of Prepaying home Loan
No comments:
Post a Comment