Step 1-Go in armed with knowledge and features that will suit your requirement
Step 2-Consider the whole package, look at the rate of interest they are offering, it might be possible that they might charge high Processing fee or any other fee if they are offering lower Rate of interest. In the same way they might be charging low Processing fee but might be charging some other hidden charge or high rate of interest.
Step 3– Structuring of the loan is very important…loan Amount, Tenor, EMI that you can easily manage, because your monthly budget will be effected after start of your Home Loan.
Step 4-Cost of taking the loan…like what is the total interest that you have to pay for loan, what is the processing fee, is there any mortgage charge, do you have to pay for the franking or notary& charges.
Step 5-what are the part payment charge, is there any lock in period or condition for doing part payment, what are the foreclosure charge, is there any lock in period or condition for doing foreclosure.
Step 6-Customer Service or after sale services are also important point that you should take care of. You should also take feedback from friend or colleague before finalizing for loan.
Step 7-Engage with good Bank/HFC DSA who can guide you about different rate or special offer running with different Bank/HFC.
You can avail different type of home loans as per your requirement and need. Loans mentioned below are as per segment and requirement. .The following is the list of different types of Home Loans you can avail from the market:
Home Purchase Loans:
Home Purchase Loans are the basic home loan you can opt for purchasing new home or Resale. Home purchase are offered by all bank & HFCs. Home Construction Loans:This is for construction of a new home. For Home Construction loan you need to produced sanctioned plan and Permission from the competent authority. You also have to produce estimated cost for the construction form the architect or from contractor.
Home Extension Loans:
Home Extension Loans means loan for extension in the present structure and sanctioned plan and Permission from the competent authority. You also have to produce estimated cost for
the construction form the architect or from contractor.
Land Loans can be availed for purchasing of residential land for construction of house. Normally all Bank/HFC take affidavit to start you construction arys form 9 month to 24 month
Loans are provided to transfer you present loan to Bank /HFC. Normally this is done to reduce the present higher rate with Bank/HFCs
Refinance loans are availed if sale deed has already been done and should be later than 6 months. Loans are done at home loan rate.
NRI Home Loans:
NRI Home Loans are meant for Non-Resident Indians who wish to build or buy a home or property in India
An Important component and deciding factor in any Loan is the Rate of interest. There are different types of Rate of interest available in the market and before deciding on the rate you should understand advantages and disadvantage. So understanding the type of interest rate and how to take benefit from it.
Floating rate of Interest………. Its advantages and disadvantages
As the name suggests FLOATING Rates, Rate of Interest is not fixed, and its changes time to time by bank. Is depend on Reference rate i.e. base rate of Bank and BPLR of NBFC.RBI normally reviews its policy quarterly, based on India’s economic situation. There can be a situation that RBI increases the Repo and Reverse repo rates but bank/HFC can stick to the present rate or can increase the Reference rate leading to the increase in ROI of the Home loan customer and vice a versa RBI decreases the Repo and Reverse repo rates but bank/HFC can stick to the present rate or can decrease the Reference rate leading to the decrease in ROI of the Home loan customer. Maximum customer opts of Floating Rate of Interest in the present scenario.
Fixed rate of Interest………. Its advantages and disadvantages
Fixed rate home loans offered by banks in India are fixed for the entire tenure of the loan. Fixed rate home loans are at least 1% to 2% higher than the floating rate home loan. In fixed interest rates benefit is there rate of interest remain fixed in spite of increase rate of interest in the market. Disadvantage is that their rates are 1% to 2% higher than the floating rate and in spite of decrease in rate they don’t get benefit of it
Fixed Plus Floating rate of Interest………. Its advantages and disadvantages
For Example: For the loan amount of 20 lacs for 20 years for first two years they offer fixed rate of 8 % and after that it switches to Floating rate of interest. We need to be careful while choosing as bank/HFC give lower rate but after completion of fixed tenor they increase the floating rate very high
The principal amount in the repayment of a home loan can be added to the 80C limit of Rs1 lakh for tax savings.
The interest component of home loans is allowed as deduction under Section 24 B for up to Rs1.5 lakh in case of a self-occupied house. In case the house is in the joint name of your spouse and you (joint loan), each one can avail of Rs1.5 lakh interest component deduction. The best part is that this limit is only for self-occupied house. If you have property which is rented out, you can deduct the full interest paid on the home loan. The rent on the property does become part of your income. If the rent is lesser than the loan interest, it will lower your overall tax liability. In any case, interest on loan offsets the rental income which is good for tax savings. For joint loan and self-occupied home, it is important to show the loan repayment by both husband and wife as they can avail of Rs1.5 lakh each on loan interest deduction. If the EMI (equated monthly installment) is being paid from one account by ECS (electronic clearing service), pay your contribution of loan repayment to your spouse by cheque. It will help in case of IT assessment. In case your spouse does not have any income, only you can take Rs1.5 lakh loan interest deduction.
Union Budget 2013-2014 raised tax deduction limit by Rs1lakh under section 80 EE for the first time home loan takers to promote the housing sector. A person taking a loan for his first home from a bank or a housing finance corporation up to Rs25lakh during the period 1 April 2013 to 31 March 2014 will be entitled to an additional deduction of interest of up to Rs1lakh. If the limit is not exhausted, the balance may be claimed in 2015-16. This deduction will be over and above the deduction of Rs1.5lakh allowed for self-occupied properties under section 24 of the Income-tax Act.
With respect to under-construction property, you can claim tax benefit in respect of interest on the housing loan availed only once the construction of the property is completed. The interest paid for the period prior to the FY in which the construction of the property is completed shall be deductible in five equal annual installments commencing from the FY in which the construction of the property has been completed. Accordingly, the deduction towards aggregate interest (including one-fifth of pre-construction interest) could be claimed from the FY in which the construction of the property is completed.
Your loan will be disbursed within 4-7 working days post receipt of the required documents. Loan sanction and disbursal is at the sole discretion of the bank.
You can repay the loan in Equated Monthly Installments (EMI’s) using the ECS facility, post-dated cheques or a direct account debit.
At the time of booking of your loan, the EMI (Equated Monthly Installments) is calculated based on the loan amount sanctioned, interest rate and tenure.