The process of buying a home has always stayed the same. So, how does it matter in 2020? Although, the process of home buying hasn’t changed, other than technically, the right approach is necessary with changing economy and market conditions to make the right decision. There is no denying the fact that buying a house involves considerable financial expenditure. With proper planning and a little bit of effort, your home buying process can be fast and easy! Read on to find out how.
Home Loan and Tax Savings
A majority of buyers opt for home loans, knowing the tax advantage is one of the first things to do. Remember that apart from the principal component of home loan, the very interest on it is also tax-deductible. Also, one would like to keep a woman applicant as the co-borrower as it can bring down the amount of interest significantly. Even better, if both applicants are working professionals, then they can apply for a joint loan, and the eligibility amount, in that case, will be comparatively higher. As such, both husband and wife can enjoy tax deduction up to INR 1.5 Lakh for the principal to be repaid, which falls under Section 80C. Additionally, both can claim up to Rs. 2 Lakh each according to Section 24b.
Choosing a Bank that Offers a Low Rate of Interest
When it comes to procuring a home loan, banks have made it increasingly easy process. As lending rates turns competitive each day, it is essential that one performs due diligence and opt for a bank that offers the lowest interest rate. These days some banks have also come up with attractive options for female borrowers where they offer a reduced rate of interest to the tune of 0.01 and 0.15 percent. Now, the percentage might seem a little low. Still, when it comes to a home loan, the tenure usually runs anywhere between 15-20 years, and even such a small discount in interest rates can contribute towards saving substantially. For instance, any difference of 0.05 percent on a loan amount of 50 Lakhs for a tenure of 15 years can offer savings of 25000-27000 when counted.
Do not ignore under Construction Ventures
While the advantages of moving into a ready apartment are plenty, they are usually the ones that are priced higher than under-construction projects. If one can afford to wait, then investing in an under-construction property can be more beneficial compared to a ready-to-move-in apartment. When considering investing in an under-construction project, it is necessary to work with reputed builders of Kolkata. Always ensure to check for RERA registration and the track record of the developer as well so that your apartment gets completed within the scheduled time and handed over to you. A good way is to choose and invest in properties where the builder or the developer has opted for title insurance.
Pradhan Mantri Awas Yojana (PMAY)
While one is looking to procure a home loan, the PMAY is a befitting initiative from the Indian Government to realize the goal of Housing for all by March-end, 2022. Provided one satisfies the pre-requisites for obtaining a home loan under the scheme; one can enjoy great subsidies. PMAY happens to be a credit-linked subsidy scheme (CLSS), which is an excellent fit for first time home buyers who can avail up to 2.67 Lakh of subsidy benefits right against the home loan amount. Many builders and developers in Kolkata are already aware of this and they should be able to tell you which projects qualify for the scheme.
Home Loan Insurance is not Mandatory
When you are looking to buy a house by taking a home loan, it is never compulsory to purchase insurance coverage. No matter how much your lending bank presses on you, there is no hard and fast rule issued by RBI or IRDAI that binds you to buy insurance coverage from the lender. One can always choose to purchase insurance cover at any later stage through an insurance company of his choice. Any home loan insurance cover that comes along with your loan is generally a single term payout. Still, the major drawback being its non-portable, which prevents you from switching your insurance to another company if you plan on changing your lender at a later stage.
The Interest Spread
The spread of the interest rates generally varies from one bank to another. So, unless it is rigidly specified in the agreement, the spread turns out to be a significant factor as it typically doesn’t change over the loan tenure unlike the interest charged, where the latter has volatile attributes and is subject to change across periodic intervals and in accordance to repo rate and condition of the economy. So, choosing a lender that offers a lower rate of interest is the right approach as it encourages the regulatory policies to bring forth interest rates at par with it. Nevertheless, that would have no hard impact on the spread as it would continue to be constant.
No matter what, never accept the first-rate offer from a developer. Always seek to enquire about other options and every other possible rate along with the facilities and amenities that are being provided. Then, throw in your best offer- A reasonable and acceptable quote. Also, never negotiate way too much further as it would eventually make the property slip out.