Every year the Union Budget is presented before the parliament on the last day of February. For the very first time this year, the Government had invited suggestions from the citizens via Twitter; a series of polls too were conducted to understand what the public expects.
Coming to the real estate scenario of India, the market has pretty much remained the same. Although, it is been speculated that this will be the last year home buyers can enjoy low rates.While real estate is a continuously changing market, it is always a good investment. But before you think about investing in real estate, you should worry about how to meet the expenditure that comes with it.
Every bank today offers a Home Loan, and that’s the solution to your worries.
What is a Home Loan?
Very few people today can afford to buy their dream home with their savings. A Home Loan is an amount that you take from a bank or financial institution for the purpose of buying or building a house. You pay the same back in EMIs which consists of the principal amount and interest rate.
The documents required for a Home Loan include, the loan application form, a copy of your address proof, income proof, bank statement/passbook, and the guarantor form (optional).
Delay in construction of a house in India can be tiresome and at the end of the day, it is you who has to face financial issues. The only relief you get as a Home Loan borrower is the tax concessions; like anything else that too comes with terms and conditions.
Earlier, you had the luxury of availing a tax benefit or Rs.2 lakh if:
- You’ve got the house in your possession within 3 years.
- The property that you’re building is for self-use.
- You’ve taken the Home Loan on or after April 1, 1999
While the Income Tax slab remains unchanged; here’s some respite for first time home buyers. The Budget 2016 has taken some cheer-worthy decisions.
Effective April 1, 2017, if there’s a delay from your builder’s side you will still be entitled to tax deductions. The finance ministry has extended the deadline to 5 years.
Not just that, apart from the Rs.2 lakh you will availing, you’ll be qualified to an additional Rs.50,000 on a loan of up to Rs.35 lakh.All of this will be applicable only if the total value of the house doesn’t exceed Rs.50 Lakh.
So What’s in it for you?
The current tax deduction on housing rent is Rs.24,000; the Finance Minister, Arun Jaitley, has increased it to Rs.60,000 per annum. The extra Rs.36,000 comes as a huge relief to individual taxpayers.
Since the deadline has been extended for the next financial year, you’ll have another 2 years of tax relief on the payment of interest.
Employees who don’t get HRA benefits can save more tax. The deduction against house rent has been raised from Rs.2,000 to Rs.5,000 per month. This means depending upon your tax slab you’ll be saving an amount that’s anywhere between Rs.3,708 to Rs.12,204.
When you take a loan you’re expected to pay the interest and the principal amount over a spread of few years. The RBI cut the benchmark repo rate by 25 basis points; repo rate is the rate at which the RBI lends to the commercial banks.This, in turn, will help cut the cost of loans for new home buyers.
Once you have procured a Home Loan it takes years and years to pay it off. The Home Loan interest in itself is a huge debt. This is where Home Loan Balance Transfer comes to the rescue.
In simple words, it is the process of transferring your current unpaid loan amount to another bank that offers lower interest rates. Now all you have to do is pay EMIs at the new interest rate to the bank that has taken up your loan.
Why should you take another to loan to pay off the current loan? Paying off Home Loans is a long and tedious process. A good chunk of your income goes into it every single month. Home Loan Balance Transfer is indeed a saviour scheme if you owe a huge sum of money to your lender.
A Home Loan interest varies from 9.8% to 12%; if the borrower doesn’t reduce the rate of interest then it’s best to transfer the amount to another bank that has a lower rate of interest.
Buying or building a house of your own is one of the first things you dream of when you start earning.Now first-time home buyers can confidently apply for a Home Loan, and pay it off without facing any issues.