Why purchasing a house with a home loan is better than renting.

Many potential home owners are torn between renting and owning a home. Some people advocate that renting is better while some say the owning a home is the best. And with the cost of property shooting through the roof in Indian metro cities, making the right decision and choosing the ideal option becomes of paramount importance.

There is one particular tool that can help tip the scale in favor of ownership and this tool is a home loan. With a home loan you can easily own a property, live with pride and give your family a place to call their ‘home sweet home’. Read on and find out just how beneficial a home loan is when opting to purchase a property of your own.

To begin with, a home loan allows you to be a home owner with just 20 to 30 percent of the fund required to purchase a property. This is because most leading lenders provide up to 80% percent of the funds required to buy a home. This means you can become a home owner with a very minimal initial payment.

People think that the home loans interest rates and the EMIs will put a huge financial stress on their financial standings. However this is not true, if you’re already renting, you’re anyways throwing away money, with a home loan you just have to redirect this rent allowance to your principal repayment. As far as home loans interest rates are concerned, it is common practice for landlords to increase the rent periodically, this could equal the amount of interest you end up paying.

If that’s not enough to change your mind, then consider this. Under section 80C of the Indian Income Tax Act, 1961, the principal repayment amount can be used to avail deductions from your taxable income subject to maximum cap of Rs. 1, 50,000. That’s not all, under section 24 of the Income Tax Act, repayment of the home loans interest rates can also be used to avail tax deduction to a tune of up to Rs. 2, 00,000.

So, if you were one of those individuals steering away from this financial instrument because you were worried about the burden of EMIs and home loans interest rates, it’s time you applied for one. Because not only do these costs somewhat equal the cost of renting & inflation, they also help you save a substantial amount of taxes.

You are also afforded a good amount of flexibility with a home loan. You can choose a long or short tenure, depending on your needs. A longer tenure will have lesser interest rates. If interest rates aren’t a problem for you, you can opt for a shorter period and finish the loan repayment quickly. You can even choose from two or three different types of home loans interest rates, i.e. fixed, semi-fixed and floating. Each of them serves different purposes and needs; you can choose one that suits your requirements. You can also make prepayments, but some lenders may levy a charge on such payments.

A home loan will help you make a great investment. If you opt for a loan in your mid-twenties, chances are by the time you turn 45, the home would be in your name. And by then its value would have appreciated considerably too, making it a great investment.

Owning a home through a home loan will give you the feel of financial success and will serve as a symbol of accomplishment. Your family members will have a space of their own and you won’t have to be under the control of a landlord.

If you’ve been planning to own a home, consider a home loan! It’s one of the easiest ways to make the dream of ownership come true. Speak to a financial advisor today and discuss how a home loan can benefit you.

Something you need to know about housing loan interest rates.

Are you planning to buy a home at a price you can manage? Then with the ascending property prices, it is wiser to take the decision sooner. The financial organization lends you the required money at floating or fixed rate of interest. House loan interest is the extra amount you pay the financial organization for providing you the financial support. The rates at which different financial organizations provide the housing loan amount are variable in nature. The experts suggest the borrowers to visit some common aggregator and understand the lowest rates available in the market and then move ahead.

The rate of interest depends on the principal amount; the customer is borrowing from the institution for the purpose of buying an immovable property. The interest rate varies with different slabs, like: up to Rs. 35lakhs of principal amount you have to pay 8.7-9.1% per annum interest rate and for above Rs. 75 lakhs slab the organization punches a rate of 8.75-9.25% per annum. The banks and NBFCs provide a concession of 0.05% on the present rate of interest to its women customers.

There are three kinds of interest rates that the organization provides: fixed rate of interest, floating/adjustable rate and tru-fixed rate of interest. The rates are subject to change during the time of disbursement.

In the fixed rate of interest the customer borrows the 75-90% of the property value at a current fixed rate. The rate is constant for the whole loan term, irrespective of the financial health of the market. For example if the interest rate increases from 0.5-1%, then the customer gets the advantage and the lending institute bears the burden. Similarly if the rate decreases then the customer has to pay the same rate of interest at which he/she has taken the loan.

In floating/adjustable rate of interest, the house loan interest rate fluctuates. With the booming property values and inflation smitten interest rate, people were on the verge of getting dumped under debt pressure. Thanks to the floating rates. From 9-9.5% the rates have come down to almost 8.7-9.1%, this act as a buffer to the customers with old interest rate. Now they can save quite a lot of money, for the wintry days both in financial and personal life. So the floating rate changes depending on the market condition and customers can earn the benefit.

In truFixed rate of interest in house loan interest, the customer has to pay a fixed rate of interest for 2/3^rd years of the tenure after that the rate switches to floating rate.

Considering the market condition the customer may switch from a fixed rate plan to floating rate plan. They may have to pay 2% of the balance money if the switching takes place before completion of 60 months of the total tenure.

The customers have to pay to pay the EMI monthly against the balance for as long as 30 years. With sufficient money they may close the loan account with pre-payment of the loan amount. The institute doesn’t punch any penalty for the pre-closure.

With so many options available at the finger tips, you can very patiently and wisely choose your financial organization to suit your purpose and purse. The best organization will be the one that will provide you maximum money for a longer tenure at a low rate of interest. So tighten your belts, dive into the home loan mission and don’t stop till you are debt free.