Things you need to know about your home loan interest rate.

The interest payable towards a home loan makes some people decide against the loan altogether, it make others pull their hair out at the end of every month, whereas for some it’s just a small price to pay to own a home of your own. But believe it or not this price comes with some advantages and a lot of intricacies. So before you pass judgment on or apply for a home loan, here are some things you should know about the interest payable towards a home loan.

It beats paying rent & helps you invest in property.
Your house loan interest is part of the EMI you pay every month and though it might seem like an expense, it’s much better than throwing away money in the form of rent. The interest you pay along with the principal amount also act like an investment plan. After the tenure is over, you would have a piece of property that not only belongs to you but also would have appreciated greatly over the tenure of your loan. In comparison to renting where your money buys you nothing, taking a home loan & paying interest is a much better choice.

There are types of house loan interest rates.
When you opt for a home loan, you can choose between fixed & floating interest rates. Fixed interest rates are slightly higher than floating rates and are designed to suit risk-averse borrowers. Floating interest rates on the other hands are slightly lower and can fluctuate over the tenure of the loan based on market performance and government policies. This type of home loan interest rate is best suited for younger people whose salary is bound to increase over time.

You can calculate home much interest you have to pay in advance. EMI calculators available online allow you to arrive at the exact interest rate payable for each month of the tenure of your loan. These calculators allow you to know the EMI payable beforehand and thus allow you to better budget your monthly income to comfortably pay back your loan.

You can save taxes with your house loan interest.
Under section 24 of the Indian Income Tax Act, the interest paid towards a home loan can be used to avail deductions from your income. Under this section, Homeowners can claim deduction of up to Rs.2 lakhs per year. If the tenure of the loan is 20 years, you can save up to 40 lakh over the course of you home loan.

You can pay less house loan interest by paying a larger down payment.

If the interest payable against a home loan is worry for you, you reduce it by saving up and paying a larger down payment. Since the interest amount is calculated on the amount borrowed, a higher down payment will result in a smaller borrowed amount and in turn lesser interest payable.

These were some basic pointer you need to keep in mind when you address the topic of house loan interest and it rates.