How to Notch Up the Benefits on Home Loan Deals

If you are planning to buy a home and are looking for home loan, you must know that the initial planning process is very crucial as well as the most difficult aspect. There are plenty of things that you need to consider including selecting the right property, deciding on the loan amount before you enter into an agreement with the lender. The fate of your loan greatly depends on how you approach the financial institution. 

Once you have borrowed home loan all you need to worry about is the repayment of the monthly installments. However, you must know that the difference in getting a good home deal is that negotiating your way with the lender can get you attractive additional benefits as well as it will reduce the complications. This in turn would make borrowing an enjoyable experience. 

No matter, if you are borrowing home loan or applying for LAP (loan against property), you need to work smartly and have a proper strategy in place. This would not only give you an edge over the lender but also allow you to extract maximum benefit from your loan deal. 

Just like any other dealings, while availing home loan it is important that you stick to basics. If you do the basics rights and meet the requirements of the lender then only thing you would be left to do with is to negotiate with the lending officer and get a loan scheme that is in your best interest.

One of the most important things you need to consider while applying for home loan is the credit score. You need to maintain a positive credit rating. Besides, you must be perfectly aware of your exact requirement in term of the loan amount you need, the duration you wish to apply for and more importantly assess your future financial condition so that you are able to repay the amount comfortably. 

If you have done your research well and have got all the things in order, you can be sure of getting the perfect loan offer. Even if you don’t have an impressive portfolio, you may still get you loan sanctioned but you may not be enjoy the benefits but you would get a loan with only regular features.

Get A Rewarding Deal on Joint Home Loan

Majority of the people in India who wish to invest in real estate property invariably rely on home loans to get the required funds. If you are looking for home loans you can consider applying for joint home loan instead of opting for an individual loan.  You can apply for a home loan jointly with your spouse or with any other family member including mother, father and brother.  Apart from your family members you can apply for a joint home loan with six co-applicants. A major advantage of taking joint loan is that it only allows you to share the burden of repayment but also allows you to get a higher loan so that you can buy a better property. 

Who can be co-applicants?
You can obtain joint home loan with your parents, siblings or spouse. You can not apply for joint loan with any person, you either need to be married couple or you must have blood relation with the co-borrower. There are certain HFCs in India that allow siblings (brothers) to apply for home loan on a joint basis provided both the applicants are joint owners of the property.

Generally, the financial institutions in India do not allow friends, unmarried partners and sisters to apply for joint home loan. If you are applying for joint home loan with your spouse then the maximum loan term can be 20 years, whereas, if you are applying for children, sibling or parents, the maximum tenure is 10 years.
Documents Required for LoansThe documents required for joint home loan varies from lender to lender, however, there are certain basic documents that all HFCs consider. The documents are:

- KYC (know your customer) form- Income proof of all co-applicants- Identity and address proof of the co-borrowers- Proof of co-ownership of the property

What is the tax benefits associated with joint home loan?

Joint home loan is beneficial from the tax point of view. Under section 24 and Section 80C of the Income Tax Act, the co-borrowers can claim tax rebate on the interest as well as the principal amount repaid. 

Repayment of Home Loans

The repayment procedure for joint home loan is similar to the normal home loan. You can either pay through individual’s account or from joint bank account. You can also pay through ECS or electronic clearing system. Another alternative way to repay the loan is to share the EMIs with your partner in a way that repay the EMI for a specific number of months and the other person will pay for the balance months. 

At Indiabulls Housing Finance ltd, you can be assured of full support from our expert staff. We would guide you through the process and help you get the best deal. 

Tax Benefits on Home Loan

It is a known fact that buying a home is an expensive proposition. In the purview of the rising prices of the real estate properties, it would require huge amount of investment. In such condition, several people find it difficult to afford buying a home without applying for a home loan. It is a credit facility that comes with a cheaper rate of interest and longer repayment duration. Besides, it comes with tax benefits that make it even more attractive proposition for loan applicants. There is various tax benefits associated with home loans under different sections of the Indian Income Tax Act, the tax allowances are discussed below:

- HRA (Home Rent Allowance)

Majority of the salaried employees are entitled to get housing rent allowance under section 10 (13A) of the Income-tax Act. The tax benefit is applicable as part of the compensation structure. You can claim the HRA for living in a rented home until the construction of the property is completed and is ready to be occupied.  Once the property is ready to be occupied, HRA would be stopped immediately. 

- Tax exemption on Interest payment

Under section 24 of the Indian Income Tax Act every person who has availed home loan is liable to get tax exemption on the interest component of their loan. The tax exemption is also applicable for purchase, construction, re-construction and repair of the property. This implies that you can claim the allowance on the interest payment each month as well as on the other aforementioned costs that are incurred in a financial year. The maximum deduction you can get under section 24 on the self occupied property is Rs. 1.5 Lakhs in a financial year. 

- Repayment of principal amount

People who have availed home loan from any HFC (Housing Finance Company) are eligible to get tax deduction on repayment of principal amount. The deduction is applicable under section 80 C and the maximum amount of tax rebate you can get is Rs. 1 Lakh in a financial year. You must know that the deduction under this section is clubbed with insurance premiums, school fees, NSC (national saving certificate), EPF (employee provident fund). While claiming the tax benefit it is important to know that the deductions are valid only on self-occupied properties and not on rented properties. 

If you have applied home loans with Indiabulls Housing Finance Ltd, our executives would provide you full assistance on tax benefits. 

Loan Against Property vs Personal Loans

At some point in life, most of us might face a situation of financial emergency. It could be due to multiple reasons. During such times, the first thought is how do we raise the additional money? More often than not people rely on loans.

While availing loans for personal purpose, a lot of people often get confused whether to go for personal loan or LAP. There are several financial institutions in India that offer both personal loans as well as loan against property. If you are looking to avail funds, understanding the difference between the  features of personal loan and LAP will help you  make an informed decision. 

Individuals can avail LAP by mortgaging their property as a security cover. For personal loans, you need not have to pledge any property or there is no need for you to get a guarantor to sign the application. For LAP you can mortgage your commercial or residential property. It can even be a piece of land. 

After home loans, loan against property is the cheapest retail loan. The interest rate for LAP usually, varies in the rage of 12% to 15%. On the other hand, the interest rate for personal loan is much higher. It ranges from 16% to 21%. 

Since the rate of interest for LAP is lower, the EMI (Equated Monthly Installment) is also much lower as compared to the EMI for personal loan.

The maximum amount of loan you can get by pledging your property would depend on the market value of the property. For personal loan, the eligibility is determined by your monthly/annual income. 

A significant benefit of LAP is that it comes with longer repayment duration; it generally varies from 5 to 15 years. For personal loan, the maximum repayment duration is 5 years. 

Considering the above features it is quite evident that LAP has several benefits over personal loan. With Indiabulls Housing Finance ltd, you can avail loan against property and get up to 65% amount of your property value.

Prepayment Home Loan – what do I need to know?

A lot of people who avail home loans tend to be apprehensive about prepaying their loan mainly because of the penalty charges associated with it. Most of the housing finance companies in India levy a penalty charge on prepayment of home loan; the charges usually range from 1% to 5% of total loan amount. The penalty charges on home loan prepayment are higher in private banks than government banks. 

Recently, the NHB (National Housing Bank) issued a notice to all the HFCs in India to ban the home loan prepayment charges. The ban is levied on both floating rate interest loans as well as fixed rate interest loan schemes. If you are planning to prepay your loan, you need to remember the following tips:

Negotiate with the bank

Before you transfer your home loan to prepayment loan, you need to explain the reason to your lender why you want to repay the loan beforehand. If you find the EMI or the interest rate is too high for you to afford, you can negotiate with the lender to get extension in the repayment tenure or reduction in the EMI rate. 

Switching your Interest rate scheme

Depending on the housing finance company you choose to avail your home loan, you may get the opportunity to switch your interest scheme. If you have availed loan on fixed interest rate basis and finding it difficult to repay, you can switch to floating interest rate scheme. The floating rate is usually, 1 to 2 percent cheaper than fixed rate home loan. 

Prepay partially

If you have budget constraints for full pre-payment and the penalty charges is too for you to pay, then it is best advised to negotiate with the lending institute about partial prepayment. Most of the HFCs in India allow borrowers to prepay maximum of 25% of the total loan amount. 

If you have availed home loans from Indiabulls Housing Finance Limited, you would not need to pay any pre-payment charges, not matter if you are making partial or full prepayment. 

Preparing to take Home Loan – What steps should I take?

Majority of the people today need a home loan to buy a property of their choice. Unlike a few years back when the prices of the real estate properties were not costly, one could have managed to purchase a property with their own savings. Today, however, in the purview of the rising cost of properties most of the salaried people find it necessary to avail home loan.

If you have decided to buy a residential property, you need to have a proper plan in place and make certain preparations before procuring home loan. You need to get all the documents ready related to the property you wish to buy well in advance before you approach the housing finance company. Apart from the home documents, you need to submit your personal profile including the details of your permanent and current address, family background, age, income details. All these piece of information would be required by the housing finance company.

The lending institutions in India carefully evaluate the documents that reflect your source of income as they use it as a yardstick to determine the maximum amount of loan you are eligible for. If you are a business owner or if you a self-employed professional, you need to provide details of your business profile, nature of business, and statement of accounts for the last 6 months, copy of income tax returns filed for past 3 years and copy of form 16.

Scrutiny of application form by the housing finance companies

When you submit the home loan application to the lending institution, the lenders initiate a process to scrutinize the documents submitted by the borrower. The lending institution usually appoints a special team to validate the authenticity of the documents. Once the lender confirms the documents, the officer in charge responsible for sanctioning the loan decides on the loan amount that would be forwarded. 

Once the housing finance company approves the loan, you would need to submit the original documents related to property and memorandum of home loan. When you submit the documents, the lender would issue you a cheque for home loan.

What should you ask the lender?

Before you sign on any document it is important that you ask the lender about the rate of interest, the nature of interest (if it is fixed or floating), what is the processing fee, if there is any penalty for prepayment or late payment of the EMI. You must also ask the lender if there are any hidden charges involved. 

If you follow the above guidelines the process of availing home loans would become much easier for you. Not to mention, if you are availing home loans from Indiabulls Housing Finance Ltd, you can be assure of full support from our team. 

Golden Rules to Remember While Selecting the Right Home Loan Provider in India

Investing in a residential property is probably the biggest financial decision one makes in his/her life time. Since buying a home involves putting in plenty of your hard earned money, it is only fair that you do your research well to choose the best home loan provider. There are plenty of lending institutions in India that offers home loan schemes but it is important that you do your research well to choose the best one that suits your needs.
 

Considering the following rules will greatly help you to make the right choice:

Research is the key

Oftentimes, people tend to make a hasty decision in choosing the housing finance company purely based on their market reputation or through word of mouth advice. However, you must do your research well about the reputation of the lender and check if their performance in the industry. It is vital that you take your time to list down the desired qualities of a good loan provider. 

Best interest rates

The rate of interest is certainly a key aspect to consider while selecting home loan lender. A good housing finance company would voluntarily offer you discount on the home loan package. Even a slight reduction in the interest rate would significantly reduce your liability. 

Pledge full support

One of the important traits of a good housing finance company is that they would assure full support for all your queries relating to loan as well property purchase. Also, you can clearly distinguish a good lender from the ordinary ones based on how they follow-up with your application. 

Personally visit the office

You can do all the research you want online but it is best advised to personally visit the home loan company’s office and get a firsthand experience of their services. Besides, this will help you establish a rapport with the lending officer.

Disbursement of loan

It is important that you find out with the lender about their loan amount disbursement process. You need to ask them if they would disburse the amount based on your gross salary or net salary. Also, you must ask them if the amount would be deposited in your account or forwarded in cash. 

Repayment flexibility

This is another important feature that you need to consider while choosing the best home lending institution. A good lender would never force you to accept a repayment method on the borrower; instead he would lay out all the possible options in from of you and let you decide what is best for you. 

Keep these rules in mind always to choose the best lender. With Indiabulls Housing Finance Limited, you can be assured of best services.