Owning a home is every individual’s dream. But making it a reality requires a lot of hard-work, planning, perseverance and most importantly a home loan. Before applying for a home loan, we do a lot of research on the EMI, tenure and the interest rate. However, we tend to ignore other important aspects like tax benefits etc. For this very reason, we have curated a list of points that you may have missed while researching on a home loan.
Not everyone is eligible to apply jointly for a Home Loan
People usually plan on applying for a joint home loan to get be eligible for a higher loan amount. Though banks grant loans to siblings, couples and parents and children, they do not extend this facility for friends, sisters and unmarried couples.
Your Home, Your Loan
Suppose you have half a money to buy a house and your spouse doesn’t. Your spouse will have to apply for a loan, but the banks will ask you to be a co-borrower too, as the loan has to be in every owners’ name whether or not you personally apply for the loan.
Benefits for Women Applicants
If the primary applicant of the loan is a woman. She is eligible for a slightly lower interest rate and If as a couple you’re planning on getting a loan then keep your woman as the primary applicant to enjoy lower interest rate.
When you take a Home Loan, you enjoy tax deductions under:
Section 80C for the principal amount of your loan (up to Rs. 1.5 lakhs) and Section 24(B) for the interest amount (up to Rs. 2 lakhs).
Also, if you take a joint loan, both applicants can claim the deductions. So, this takes the total deduction amount up to Rs. 3 lakhs for the principal loan amount and to Rs. 4 lakhs for the interest repayment amount.
No lender ever gives you 100% of the loan amount. Banks cover only upto 80-90% of the total value of the property. The remaining amount has to be paid by you as down payment. Therefore, if you’re aspiring to buy a house, you also need to start saving.
Rate of Interest
There are two types of rate of interest on your home loan. It is either fixed or floating. If you opt for fixed loan it won’t be fixed throughout, only upto to certain number of years.
Interest and then Principal Amount
When we start paying off the home loan. The initial years we only pay the interest amount and then only we move to the principal amount.
Now that we’ve spoken about these not so common factors. We hope you will be better equipped with home loan information while looking for a loan next.
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