How to calculate monthly instalment ease?

Buying a home needs a lot of calculations and preparation of your finances. When you take a home loan, it’s important to know the monthly installments that you would be paying to the lenders every month towards loan repayment. Experts say a wise person should not exceed the EMIs more than 30% of the take-home salary. Else, it can seriously disrupt your finances. In prior days, to determine the EMI people had to sit with the financial expert along with pen and paper, do all the brainstorming and arrive at a consensus of suitable EMIs. However, it was quite tedious, time-consuming and also couldn't guarantee 100% solution. A slight miss-misjudgment could cost a huge sum on your pockets.

But, all thanks to the internet due to which you can get to know the EMIs of your home loan in a couple of minutes. All you need to do is input few parameters like interest rate, loan amount, tenure and it will display the desired result of EMI, total interest outgo and the money you have to repay.

EMI CALCULATOR

The parameter on which your home loan EMI gets calculated is as follows:

Principal Amount: The borrower needs to enter the principal amount in the calculator.

Interest rate: It would be preferred rate as per banks or non-banking finance companies minimum to maximum mentioned rates. And also you have to specify the type such as fixed or floating interest rate.

Tenure: It would be the time duration you require repaying the loan and usually it varies from 20-30 years of timespan.

You can try different combination as per your requirements to come at a suitable figure for your home loan repayment.

Benefits of using housing loan EMI calculator:

EMI Calculator online can quickly determine the monthly installment. By entering a few details like loan amount, interest rate and loan tenure, you can check the payment details.

Definitely, it saves your hours of time as this tedious calculation is done within a few seconds. You can do this calculation on your own sipping a cup of coffee at cozy corners of your homes or offices.

The calculation done through online calculators are accurate and provide genuine payment details. Thus, you have a guaranteed solution on the EMIs

You can visit EMI calculator page of different websites of lenders and check the difference between interest rates before you come to any conclusion. You can choose the lowest home loan interest rates.

When you know what does your repayment graph look like you can stay prepared, keep your saving intact towards the monthly installment and make a disciplined effort for loan repayment.  You will stop splurging on unnecessary things as well.

When you're in the middle of repaying a home loan you can revisit your finances and replan it with EMI calculator. You can pay off the loan before the term ends, with proper planning using EMI calculator.

Home loan EMI calculator are one of the preferred options to tech-savvy borrowers who can check their loan eligibility, EMIs and interest outgo and accordingly make an informed decision on their loan.

5 things you need to know before opting for a home loan.

HOME LOAN EMI CALCULATOR

A home loan is potentially one of the biggest decisions of your lifetime. And to ensure you come out of this decision smiling and with a home to your name, it’s extremely important you get the preparation right before even applying for the loan. Like they say, what begins well ends well? Keeping this in mind, the following article will highlight some of the things you should see to before you apply for a housing loan to ensure you enjoy a smooth and hassle-free borrowing experience.

1. Your finances.
Before you apply for a home loan, you need to have an exact idea of your finances. You need to figure out the budget of your home, how much of the purchase amount you can cover with a down payment, the loan you need and the amount you are eligible for. Begin with your eligibility so you can then decide the budget for the purchase and the amount you’ll need to foot out of your own pocket. Most lenders have an eligibility calculator that you can use for that should give you a rough but better idea of your eligibility.

2. Your credit score.
Credit ratings are very important. A good score will ensure a smooth application process and also bring quick approvals. A poor score, on the other hand, could hinder your plans or cause you to settle for a poor loan offering (the better loans require higher scores). Generally, CIBIL is one of the more recognized credit rating companies in India for a home loan. A CIBIL score above 700 is considered as good, anything below that, not so good. So get your credit score, look for any errors in the report and see if you can improve the score before applying.

3. The repayment schedule of the home loan.
It’s important you know what your repayment schedule would be like before you apply. This way, you can see if you can handle can handle the applicable EMIs or if you’ll need to look at a smaller amount. Further, having the entire repayment schedule before you will help create better financial plans to cover the EMIs. Using an EMI Calculator will help you get the entire repayment schedule tabularized and neatly presented for you.

4. Upfront costs.
Besides the down payments, there are a number of upfront costs you need to account for. They include the processing fee, stamp duty, and registration fees. If you are going to take an insurance policy as a safety net, the premium is another cost you would have to consider.

5. Terms and conditions.
Before you sign along the dotted line and commit to the decision, you need to know all the terms and conditions. You will have to set aside time and go through the fine print thoroughly – it won’t make for leisurely reading but it’s a must. If you find any points that are above your understanding or that require clarity, do approach the lender and have your doubts cleared before finalizing. It’s extremely important you go into a home fully aware and informed about what you are getting into.

These were some of the more important things you need to be well aware of before you take a home loan. We hope these pointers provide you a smooth borrowing experience and help you come out the decision as a proud homeowner and with an immense sense of accomplishment.

Good luck and all the best!

4 Tips to save money on your housing loan

Buying your dream property is one of the biggest steps in your life. It’s like a sign of financial maturity and offering stability for the near future. Taking a property means chasing the preferred location & its vicinity, budget, builder authorization and finally how to finance it. Well, with private finance companies willing to offer a home loan, financing your dream is no more a herculean task.

However, when one takes the home loan there is a lot of aspects which needs careful consideration such as interest rate, processing fee, principal amount, etc. Most of us are so concerned about the monthly installment that we barely give our home loan a second thought. There are a number of important steps that can be taken to ensure that the money can be saved on your housing finance. So, here are a few tips that will help you save money on your housing loan:

Do thorough Research

Shopping around for home loans need proper market insights and help you choose the best-suited financing option. Comparing loan and negotiating with lenders can save you a lot of money. Once you know what lenders have to offer in terms of rates and fees, you can negotiate for better housing loan deal. Lower the interest rate, lesser you would be paying and more savings on your total cost you will bear.

Home Loan

Improve Credit Score

Your Credit score has a direct impact on the interest rates. Hence, it’s always important to keep improving your credit score. So, that you can negotiate with the lenders for better rate deal. When applying for home loan, ensure that you improve your credit score at least six months to one year before the application. If the credit score is low, the lender will reject your application. And if the applicant has a good credit, score he or she is considered credit-worthy and lenders place a trust on him or her.

Opt for Refinancing

Many time lenders lure with an interesting deal, which later proves to be costly on your wallet. If it's proving costly you can talk to other private lenders who are willing to reduce the interest rate for you. A good credit score, better income source, and timely repayments can put in a comfortable position for negotiating with the existing lender or switch lenders and opt for home loan refinancing. One must be aware of the costs associated with the balance transfer option.

Tax Benefits

One of the best ways to save money is redeemed tax benefits. You're entitled to tax benefits and it can help you save money as you can on the interest. For instance, under section 80C, a housing loan borrower can claim for a tax deduction of up to Rs 1.5 lakh if he or she is a salaried individual, and for self-employed, they can available up to Rs 2 lakh under section 24 (b) of the Income Tax Act, 1961. Taking a home loan is a major financial decision of life and it’s important for the borrower to check wherever possible to save money and then make an application.

Online applicants can avail interesting deals as well.

A few reasons why EMI calculator has proved to be a boon for the people

There are a number of banks and NBFCs (non-banking financial companies) in India which provide financial assistance in the form of loans. The people can make use of these loans in order to take care of their business as well as personal needs. The housing loans have proved to be quite quintessential in relieving the worries of the common man. The middle-class citizens of India can now dream to own a place of their own, thanks to the housing loans provided by banks and NBFCs (non-banking financial companies).

People can make use of the home loans in order to buy a new plot or residential property and even to refurbish any pre-existing property. The financial institutions give out secured loans and charge interest rates on the loaned amount. An EMI Calculator comes in handy in these situations, as it helps you to calculate the equated installments which you would have to pay out every month.

An EMI (equated monthly installment) is calculated after combining the principal loaned amount, interest rates on the amount and the tenure of repayment. Your monthly installment is drastically affected by the changes and the choices that you make in either of the variables. For e.g., if you choose to opt for a shorter tenure then you will have to pay lower interest rates but the same is applicable in case you want to switch for a longer tenure. Thus, an EMI Calculator helps you significantly, as it gives you an insight as to which plan is best suited for you.

This calculator is available online and can be used by anyone and at any given time. The fact that people can make use of this tool from their phone or laptops has proved to be a great boon for the people. EMI Calculator has helped people to save their valuable time; which is otherwise wasted on making multiple bank visits.

The various advantages of making use of an EMI (equated monthly installment) calculator are as follows:

1) By making use of this calculator you can get your future installments calculated in advance. Thus, you can plan your future repayment schedule in advance and ensure that you never default on any repayment. This will help you to maintain a good credit history and live a hassle-free life.

2) An EMI Calculator is not just available for the calculation of a home loan installment amount. There are a number of other loans which can be calculated by making use of an online EMI (equated monthly calculator). The various other loans which can be calculated are education loans, personal loans, etc.

3) You can calculate and achieve multiple results for a certain principal amount that you borrow from the financial institutions. This gives you a rough idea about the various options available in front of you. Therefore, you can make use of this tool and choose the repayment pattern which is best suited for you. Hence, by making use of this tool, you can borrow loans without worries.

5 things that make for the best home loan.

The best home loan – it’s something every potential borrower is looking for when considering housing finance loans. Contrary to common belief, the best loan isn’t the one that comes with the least charges. Rather, the best loan is one that suits your needs the best and covers every possible aspect to ensure your journey through debt is a smooth and hassle-free one.

In case you are in the market for a home loan but aren’t exactly sure how to choose the best for your needs, this article will cover 5 things that you should look for when on the hunt for the housing finance loan for your homeownership plans.

1. LTV ratio.
The best home loan will come with high LTV or loan to value ratio – a financial term lenders use to express the ratio of a loan to the value of an asset purchased. Most lenders will provide up to 0% of the property’s value as the loan amount, depending on the loan slab you fall into. A higher LTV means you have to arrange a lower down payment ensuring you become a homeowner at the least possible cost out of your pocket.

2. Longer tenures.
The longer the tenure, the easier it is to repay a loan. This is because when you opt for a longer loan tenure, you spread out the repayment over more months resulting in lower EMI amounts. Sure, longer tenures also mean more interest payable but you can always cut short the tenure to reduce the total interest paid by making the prepayment as and when you are in a financial position to do so.


3. Lower charges.
Besides for the interest rate, there are a number of expenses that accompany a home loan. For instance, when you apply for the loan, you’ll have to pay a processing fee which could be as much as 2% of the total loan amount. So if your loan is of 20 lakhs, the processing fee is around 40K. Other charges include prepayment charges, document handling charges, stamp duty, late payment charges, etc. Remember to compare all the charges carefully before selecting a lender.

4. Value-added services.
Some lenders will offer you expert legal and technical counseling to help you make the right home buying decision. This will be very useful considering that taking a home loan is big-ticket debt and you’ll any and all the help you can get to ensure you make an informed decision.

5. The best home loan comes with multiple repayment options.
Another vital factor you need to look for is the number of repayment options being made available to you. The more options you have, the easier it will be to choose a plan that suits your financial needs and requirements. Most lenders offer at least 5 different repayment plans.

Look for a loan that provides you all above factors at the least interest rate; the one that does is the best home loan for your needs. We hope this article has been helpful, good luck and all the best.

Tips to save your pockets against high-interest rates.

Home Loan lasts for a span of around two to three decades. Life may not be merrier each day, at times you might have to face steep inflation, costs cutting, job loss or recession, etc. So, it becomes important you save some bucks on your home loan. So, here are few tips that will help you save from the brunt of higher interest rates.

Negotiate with a loan officer

You would be happy to know a negotiation is a powerful tool. It helps you to bring down your interest rates to great extent. Your CIBIL report plays an important role in reducing interest rates. With a good CIBIL report, you can get some rebate on your interest rate and processing fees.

Make more down payments

Although, it’s an irony that you apply for a home loan because you don’t have ample of money to buy the home in cash, however, it would be wise if you pay more money towards down payment. That's because it will save your money on the interest component in the end. It's a good mantra to reduce your interest burden.

Keep CIBIL score clean

Many times incorrect details, late payment, bad records in CIBIL score will only lead to your home loan application rejection. So, it would be wise enough to make all your payments on time, eradicate any discrepancies in your report talking to the credit bureau, as it will get attractive interest rates and flexible ways for loan repayment.

Look for seasonal offers

In their quest to get good business, lenders often bring great home loan deals at regular intervals. So, don't forget to take advantage of these offers and avail an attractive interest rate. Home Loan is an adjustable mortgage wherein you pay low-interest rate in the initial phase, but then over the years, you bear higher interest rates. Therefore, it would be better to do proper research in terms of the interest rate applicable, principal amount, switching costs, prepayment charges, processing fee before you're willing to take any offer.

Make Partial Payment

Whenever any bank or finance company allows you to make the partial payment you can go for it. If you can make a partial payment, apart from your regular EMI, it would be helpful to reduce your loan burden in the long run. So, wherever you receive Christmas or Diwali bonus, any incentives earn, any fund maturity amount received you can divert the funds to make part payment, you will end up saving a lot on the interest component.

Take loan online

Many reputed private finance companies and banks have introduced websites that have complete details of their customized products. Right from new home loans to loan against property, loan for NRIs, home renovation loan, plot loans, you will get a detailed information about interest rates, tenure, repayment options and more. Right from the cozy corners of your home or office, you can fetch details required to apply for dream abode.

These are some of the ideal ways to help you save more, and pay the home loan faster and don't compromise on your emergency funds as well.

5 things you must do before taking a home loan.

A home loan is a huge decision. There are so many things you need to watch out for and some many tinny details you need to see too. Moreover, the fact that a housing loan is something you need to deal with for long periods of time, sometimes up to 30 years, it’s essential you make all the right choices or else you might be staring down the barrel of prolonged financial turbulence.

Thankfully, if you keep a few parameters in mind and do a good amount of research and planning before going into the decision, chances are you’ll have a smooth housing finance journey.

To help you with your preparation, this article will highlight 5 things you must do before opting to borrow funds to finance your homeownership plans.

1. Compare funding options.
The first thing you should do when considering a home loan is a shop for options. Check out the funding packages on offer, the interest rates, the extent of funding on offer, the tenures, the charges, etc. You shouldn’t look for the least interest rate or the highest funding, instead, you should look for a finance option that offers to meet your needs and requirements better.

2. Use home loan calculators.
Calculations and financial planning is the framework for a strong repayment structure. Therefore it’s essential that you get the math right and create concrete budgets way before you even apply for the loan.

You can use an EMI calculator to find out the kind of monthly payments you’ll have to deal with, the loan amount you can afford, etc. You can use an eligibility calculator to find out just how much a lender is likely to provide you with a loan amount and repayment calculator to chalk-out thorough repayment plans.

3. Read reviews.
The experiences of others will provide you with valuable insights into the workings and service quality of a lender. They will tell you, roughly, what to expect when you borrow from a certain financial institute or bank. Therefore, it’s essential to read-up and sees just how a lender treats its customers as you might soon be one.

4. Speak to a financial expert.
This is vital, they’ll tell you what kind of home loan you should opt for keeping in mind your current financial state. You can learn how to save money through the tax benefits of a housing loan. They’ll even guide you as to which type of interest rate, fixed or floating, suits you better. You can have them go through the terms and conditions of your loan offering to highlight any points you should be worried about or approach the lender for clarification.

5. Prepare yourself.
Get a good down payment ready, work on your credit score if it’s poor, find out all the documents needed and ensure that you are fully prepared to take on debt. Because, like they say, what starts well, ends well!

We hope this article will help you and your home loan decisions, good luck and all the best!

5 reasons why taking a home loan is a good idea these days.

Some people are afraid of taking a home loan and going into debt. The idea of having to commit a good part of their monthly salary towards and outstanding loan seems like a scary prospect to them. Other lenders do not wish to pay the price of housing loans, otherwise known as the interest.

However, keeping in mind these two considerable issues with a housing loan, there are plenty of reasons why they still make great financial sense and this article will highlight 5 of these reasons that will, hopefully, help you see these financial products in a different light.

1. They make buying property easy.
Anyone with plans to own property in India will be met by a huge hurdle in the form of the real estate prices; which, in today’s day and age, seem to be shooting through the roof and rising at an exponential rate.

However, opting for a home loan will ensure these exuberant property rates do not thwart your homeownership plans. These financial aids provide you a major chunk of the funds you need to fulfill your purchase plans.

2. Home Loans help you buy into one of the best investments ever - property.

The rates at which property prices are going up make real estate in India one of the best investment opportunities out there. Unfortunately, to buy into this lucrative investment, you’d need to have a sizeable amount of funds. The kind of funds you can easily procure through a housing loan.

With a housing loan, you can invest in Indian property and become a homeowner much quicker as opposed to waiting for an eternity to save the money you need to buy and invest in real estate in India.

3. Favorable interest rates.
Another very good reason to opt for a home loan today is the interest rates on offer. In fact, there’s probably no better time to opt for housing finance keeping in mind the fact that today’s rates are the lowest they’ve been in housing loan history. Some experts even predict these rates to fall further in the future, which could provide you additional savings in time.

4. PMAY CLSS.
Our government’s initiative to provide housing for all has brought into play a beneficial scheme known as the Pradhan Mantri Awas Yojna Credit Linked Subsidy Scheme that aims to help people from medium to low-income groups save substantial amounts of money against a home loan.

As long as your annual household income doesn’t exceed Rs. 18 lakh, you can save up to 2.67 lakh using the interest subsidy provided under this scheme.

5. A home loan can help you save taxes.
The principal repayment amount and the interest payments you make, combined, can you give you access to tax deductions of up to Rs. 3, 50,000 per annum under section 80C and 24 of the Indian Income Tax Act respectively. Approach any lender or financial expert and they’ll tell you the break-up of these deductions and how you can use this benefit to your advantage.

So if you’ve sidelined the idea of a home loan, make sure you’ve factored in the above points before making a concrete decision against opting for one.

We hope this article has been helpful and wish you all the best!

Want to know your monthly installment? Check the details on home loan EMI Calculators.

With leading banks and private finance companies reducing the interest rates home loans are quite affordable for most individuals who plan to buy a house. They are available with lower interest rates that range between 8.50 to 9.50% with a nominal processing fee of around 1-2% on your principal amount. Therefore, more and more Indians are eye-upon the exciting deals and purchasing or constructing their own abode.

Home loans are by any chance better option compared to traditional finances and personal loans. They offer flexibility in interest rates, tenure, repayment modes. However, since this loan has a huge amount often it becomes tedious to calculate the eligible amount, what would be your EMI, the processing fee, etc. The manual calculation seems to be an exhaustive job. To ease the process and understand loans in a simpler way most companies and banks have introduced home loan EMI calculators on their website that will give an exact overview of how your loan will look like.

Home loan EMI calculator enables you to understand the monthly amount you have to pay to the lending institute on a specific date of every month. EMI stands for an equated monthly installment that you have to pay every month to the lenders. When you visit the calculator page of any website you are rest assured that your couple of question would be addressed quite easily such as: What would be your monthly EMI for your housing loan, how much an individual can afford to borrow as per his or her risk appetite, how much they are eligible for, what is the maximum repayment tenure, what would be the interest rate and processing fee.

Home loan EMI calculators are available on the company's website and you can avail the service for free. You can visit the page and simply enter the amount you wish to avail towards the home loan, the interest rates you can afford to pay and tenure for you which you will need to make repayments. You will get a complete table array that will display your exact principal, interest rate applied and your monthly installment payment. You can set the start date of your monthly payment schedule.

Home loan EMI calculator gives you an insight into the future where you can afford to make complete EMI payments of the loan or not. It gives you can estimate value you have to save every month. It helps you stay prepared for future payments. Earlier you had to sit with financial experts and make bills of income expenditure and then calculate emi which would have a chance of manual errors. One slight mistake would barge the whole EMI calculation. Besides, the process was very much tedious and time-consuming.

But Home loan EMI Calculator is helping to ease the pain and confusions. All you have to do is insert the values correctly and save a lot of time. They give you complete insight into the EMIs you have to pay and you can plan your month finances accordingly. So, no more confusion and tension of EMI just visit calculator page and get easy options for home loan installment calculations, now!

Calculate your monthly installments with ease.

Many people avail home loans to complete the dream of owning a beautiful abode that will create moments and cherish memories for the lifetime. It’s a place where family members share a unique lifetime bond. Every house has innumerable stories and sentiment value being attached to it. It’s most often that people have a low salary, other financial responsibilities, and existing debt due to which it become difficult to take a home while dealing with cash. Also, buying a home means you need lot money which no one has in full. Therefore, most private finance companies and banks offer home loans that come at attractively lower interest rates, low processing fees, flexible ways of repayments and a fair amount of time to repay the debt.

Taking a home loan means understanding lot of terms and conditions, jargons, and calculations associated with it. Sitting down with pen and paper and working on tedious calculation will only add to their worries. To ease out the mental worry many online websites offer home loan EMI calculator which are quite user-friendly and easy-to-use tools.

These EMI calculators are very easy to understand and give complete transparency on loan details. Customers can use these flexible online home loan emi calculators to arrive at the amount that you’re comfortable with. The calculator will help you plan your finances accordingly and save for the loan repayment amount as per your requirements.

Experts say before availing your loan you should use these calculators that will guide you through the loan structure, interest rates applicable, processing fee, pre and post payment charges, loan repayment ways, etc. You can use these calculators to easily judge how affordable a particular loan can be on your wallet.

Some features of using EMI calculator before availing home loan:

• It helps you get a quick view on the overall finances for your home loan. Potential customers can easily calculate their monthly installments with these calculators
• Save your valuable time, energy and efforts from tedious calculations, visiting branches or financial experts, discussing options and then arriving to any consensus.
• These EMI calculators provide you a real-time data and the projected scenario of your home loan would look like in terms of finances and repayments. It will help you stay prepared and have a quick visual on the savings that you should set aside for your monthly installments.
•  Calculators require you to enter your monthly salary, additional income source, preferred interest rates, a type such as fixed or floating, tenure and required money. Once you key in these details the emi calculator will give you the maximum loan amount you get qualified for and the monthly mortgage payments you can make.
• These calculators can help you make big calculations look with ease. It has a very creative and simple interface which makes the calculations look much more easy and fun.

Taking a housing loan will reduce the stress but find the right one at affordable interest rates and low processing fee is a difficult task. Manual calculation only adds to your worries as they are not guaranteed solutions and could lead to mistakes. Even a 0.25 to 0.50% makes a huge difference in the long run. Therefore, use this emi calculator and make a defined approach for your housing finance. Visit online websites and check your interest rates, eligibility, repayments strategies, processing fees, now!

Why you need to go over the internet before applying for a home loan.

Taking a loan to buy a home is a huge financial decision. There are so many things you need to think of and keep in mind before you apply for one. The decision needs to be backed by truckloads of research and built on a strong foundation of groundwork and planning. Overlooking the slightest detail could cause you homeownership plans to come crashing to the ground. One tool that can come to aid & help you with the necessary resources needed to make sound housing loan decisions is the internet. Read on to find out how the internet can help with a housing loan and aid you in making better-informed decisions.

Check your credit score & eligibility online.
One of the most important factors that decide the approval of your housing loan is your credit score. Previously, getting your credit score meant visiting the branches of credit bureaus. But nowadays you can get your credit score in just a few clicks. Once you know your credit score, you know just where you stand in terms of approvals. If you score is below 700 you can find ways to improve your score on the internet and implement them before you apply.

The internet is also helping you find your eligibility in seconds.  See how much of a loan you stand to get with your current income and age. Wondering how? Simple, just use one of the many housing loan eligibility calculators available most financer’s websites.

Find, compare & apply for home loans online.
The internet is also your one-stop-solution to find, compare your options and apply for the loan that suits your needs. You can either visit the websites of the financers or go to a housing loan aggregator site where all the loan products from the various lenders are listed. People who are existing customers will also post their reviews online and this gives you valuable insights. Once you’ve finalized on a lender, go to their website and submit the application online itself, scan the required documents, upload them and even pay the processing fees online! The internet can have your housing loan application sent without a step outside your home.

Prepare yourself for your home loan online.There are many websites that provide you with an EMI calculator that you can use to get the entire repayment schedule for your housing loan. These calculators do what otherwise took a day and provides near accurate results that are more than helpful to create a budget perfect to pay back your loan without any turbulence.

These were some of the ways the internet is making a home loan easier for you. If you wish to have more guidance on the topic of housing loan, simply visit the leading housing finance providers’ websites, they have chat assistance wherein you can have your doubts answered with a few taps on your keyboard and couple of clicks on your mouse.

A finance to complete your dream of buying home.

Price of houses is skyrocketing these days, and it’s impossible to purchase a property by dealing in cash. Taking traditional finance is like a trap and borrowing from friends and family members will always have a fear of bringing a rift in the relationship if not paid on time. Therefore, it’s common for many of us to take home loan from banks and financial institutions. Due to the attractive interest rates, home loans are now available at cheaper price. The process of online application has made approvals and disbursals at quite faster pace.

Once the bank or financial institutions scrutinize your documents well along with credit history, check your borrowing potential you will be eligible for a certain loan amount.

If you’re planning to apply for a home loan, here are few things you should follow for smoother processing:

Check your loan eligibility: Lenders who offer home loan have a list of eligibility criteria. After a thorough check of all these parameters, you’re considered a potential borrower. Banks or financial institutes typically look at your credit history, income source any additional source, repayments habits of prior loans and then decide for a certain loan amount. The demographics to check would be age, occupation, margin money available, number of family members, etc. which are also important while determining the interest amount on the home loan.

Property Legality: Before you select your dream property, make sure the builder and the project you choose is reputed with all the legal papers in place. These days many people are being duped with uncertain charges on you avail a loan. Also, there are fraudulent projects being constructed for earning money. With RERA implementation, you can take a look at the builder’s profile online on their website. Banks or finance companies will definitely refuse to give loans if the builder is not on their approval list.

The Down Payment: Every bank or finance companies will finance 80-85% of your project, so the rest 15-20% has to be taken care off by the customer itself. Which means it’s important you must have a budget chalked out before you start looking for a new house? Calculate the down payment you will have to pay the loan amount you wish to take. Make necessary arrangements by the time you’re loan is sanctioned. Of course, you can choose to pay more if you can because the lesser loan you take, low would be interest rate and more manageable as well. Try to minimize the borrowing amount to reduce the interest outgo.

Fees and Charges for Loan Amount: A home loan has various types of fees associated with it. First would be the processing fee on loan amount. Pre-closure charges when you wish to close loan amount early. Late penalty charges when the monthly installment is delayed. Check if these fees are reasonable when you choose a lender.

Check the interest rates: Obviously, the interest rate on loans is a crucial factor while taking your home loan. Lower the interest rate, more affordable would be your monthly installment and more money you can save. Housing loans are offered at fixed rates and floating interest rates. Some finance companies give partial fixed-floating rates wherein the rates are fixed for the initial time of around 2 to 3 years and then it moves towards floating rate. So, it’s better to weigh your options before you zero in on a home loan.

Tax Benefits Associated With Housing Loans

Multiple benefits - how?

EMIs (elementary monthly installments) consist of two parts - the interest portion and principal amount. Interest paid is allowed as a tax benefit under section 24(b) (subject to restrictions), while the principal amount repaid is allowed as a deduction under section 80C.

Maximum ceiling on tax benefit

Maximum tax deduction for repayment principal component of home loan can't exceed Rs 1, 00,000 under section 80C. One should keep in mind that other investments/contributions are also allowed as a deduction under section 80C, and this limit of Rs. 1, 00,000 applies to all of them put together.

Housing loan interest deduction, on the other hand, is allowed up to a maximum amount of Rs 1, 50,000 under section 24(b). However, the acquisition or construction of the house property should be completed within 3 years from the end of financial year in which loan was taken; otherwise, the amount of interest benefit allowed is only up to Rs 30,000.

Furthermore, the above tax deduction limit u/s 24(b) is applicable only for self-occupied house property. In case of let-out or deemed to be let out house property, interest is deductible without any limit.

Starting date for claiming tax benefit

Some say that deduction on principal component of home loan under section 80C is allowed as soon as one starts repaying the home loan. Some say deduction is allowed only once the construction is completed. The law isn't clear on the matter; hence the ambiguity remains.

Interest deduction on housing loan under section 24(b) is allowed only on acquisition or completion of the house property. However, interest deduction for pre-acquisition or pre-construction period is also allowed but only after acquisition or construction is complete. It is allowed in 5 equal annual installments. But even after including the above, the total deduction should not exceed Rs. 1, 50,000 per annum.

Source of home loan

Unlike section 24(b), Section 80C doesn't allow tax deduction for home loans taken from friends and relatives. For claiming tax benefit on principal component of the home loan under section 80C, you need to borrow only from the lenders specified in that section. There is no such restriction under section 24(b) of the IT Act for claiming tax benefit on interest component of the housing loan.

Purpose of housing loan - Home purchase / construction vs.

Home improvement Deduction under section 80C for principal portion of the housing loan EMI is not allowed if the home loan borrowing is for the purpose of reconstruction, renewal or repair of house property. Put simply, tax benefit under section 80C is only allowed for buying or constructing a new home. In contrast, deduction for Interest is allowed under section 24(b) even for the loan taken for the purpose of repair, renewal or reconstruction of existing house property but subject to the limit of Rs 30,000 in case of self-occupied house property. In case of let out house property, actual interest is allowed without any ceiling.

Payment Basis - Due Basis vs. Cash Basis

Tax benefit u/s 80C can be claimed only when the actual payment is made. Interest deduction u/s 24(b), on the other hand, is allowed on accrual or due basis. Put simply, unlike principal portion, interest deduction can be claimed even if not paid.

Restriction on sale of house property

The tax benefit under section 80C is allowed subject to the condition that the said house property should not be sold before a period of 5 years. If you violate this, the deduction will be discontinued and the entire tax deduction claimed in earlier years under section 80C - for repayment of principal component of the home loan - will be deemed to be your income in the year in which you sell the property. However, the same doesn't apply on the housing loan interest deduction claimed under section 24(b).

Home loan prepayment: Original loan vs. Subsequent loan

Tax benefit on interest component of the home loans u/s 24(b) is allowed not only for original home loan but also for subsequent loan(s) taken to refinance the first loan. In other words, if the new housing loan is taken to pay off an existing housing loan, tax benefit under section 24(b) is allowed. However, unlike section 24(b), there is no specific mention under section 80C for prepayment of existing home loan by taking a fresh home loan.

So what it means is that when you repay the balance outstanding principal component of your existing home loan by taking a second home loan, you'll be entitled for tax deduction under section 80C but within the overall limit of Rs one lakh. Further, when you subsequently start repaying your second housing loan, you'll be entitled for tax benefit only on the interest portion u/s 24(b) and not on the repayment of principal component u/s 80C.

{Source: http://ezinearticles.com/?Tax-Benefits-Associated-With-Housing-Loans&id=6743691}