First-Time Home Buyer? Here Is How To Grab The Best Home Loan Deal

Buying a home is probably one of the biggest investment decisions that you will have to make. This is especially true for the first time home buyer, for whom investing in property in India can mean it is a trepidation-filled decision. While the financing options and rates available are aplenty, the loopholes that you may succumb to also abound. Nevertheless, with these home loan tips, first-time buyers can make smarter decisions than what even old hands can.

1. Pick the best of the lot

The home loans available today appear to be so attractive that most first-time buyers may end up choosing one at face value. However, if you were to compare home loan rates among those available, chances are that you find something much more suited to your needs. Research well, get all your doubts clarified, and finally make an informed decision.

2. Don't be shortsighted

One of the common pitfalls that most first-time buyers of residential projects in India seem to overlook is the trade-off between tenure and EMI payment. It is so much easier to settle for the longest loan tenure where the monthly EMI would be lesser. However, if you were to use a home loan calculator, you might be surprised to know that you might have been paying less every month, but over the years, you have been allowing the bank to make more money off you. For the same loan amount and interest rate, you might end up paying 30-40% more than what you would have for a shorter loan tenure.

3. Don't over-tax yourself

Updating yourself about the different tax implications is actually one of the first home loan tips that you must consider. Under Sec 80C of the Income Tax Act, home loan principal payment up to Rs. 1.5 lakh is deductable from taxable income. This is allowed only for a fully constructed home. In addition, you are eligible for a deduction of up to Rs. 2 lakh (Sec 24) if you are living in that home. If the new apartment in India has been given on rent, you can claim full deduction on the interest paid.

4. Set your own terms

Do you know that you might be in a position to negotiate on the rate of interest if you have already finalized a property for sale in India? If you want to get your loan passed urgently, try approaching the banks towards the end of the month. Chances are that the salespersons might agree to give you a favorable interest rate along with other benefits.

5. Fixing on the right amount

Before you get down to setting a figure on your home loan, do consider all the other hidden charges that are included in the amount sanctioned. These additional charges usually fall under the heads of administrative or processing fees, service charges, etc. The final take home amount that you receive from the bank will be after deducting these charges.

Using these smart home loan tips in India you could be in a better position to make your first big investment in the residential sector!