Building a home it’s a dream for everyone. To fulfill the dream most of the people avail a home loan from a financial institute. In the loan the timing or purchasing a home is really important because it helps in saving a lot of money! Suppose you’re purchasing a home and applying for a home loan during the peak time of repo rate which is nothing but a number that RBI decides to lend short term money to a bank and also control inflation. So, if RBI keeps repo rate at one time more than 8% then the affordability of home loan for you can be very difficult right? So understanding the right time is important. Here we will understand this!
One of the most significant advantages of applying for a home loan now is the low interest rates. The Reserve Bank of India (RBI) has taken measures to keep the repo rate low (now at 6.50%) to better economic growth, which in turn has led to lower home loan interest rates offered by banks and financial institutions.
Lower interest rates directly translate to lower Equated Monthly Instalments (EMIs), making it more affordable to service your home loan. For instance, a reduction in interest rate by even 0.5% can lead to significant savings over the loan tenure.
Example: For a home loan of ₹50 lakhs at 7% interest for 20 years, the EMI would be approximately ₹38,765. If the interest rate drops to 6.5%, the EMI reduces to ₹37,295, saving you ₹1,470 per month.
Home loans come with substantial tax benefits under the Income Tax Act of India:
Section 80C: You can claim a deduction of up to ₹1.5 lakh on the principal repayment
Section 24(b): You can claim a deduction of up to ₹2 lakh on the interest paid on the home loan.
For first-time homebuyers, there are additional benefits under Section 80EE, where you can claim an additional deduction of up to ₹50,000 on the interest paid, subject to the loan should be disbursed between 1st April 2016 to 31st March 2017.
With the reduction of GST rate and crores of affordable housing being built under PMAY schemes and over the period of time many schemes have been introduced. This will help you to save your interest rate and overall EMI.
Now, almost every bank offers a flexible loan tenure and flexible repayment option. Tenure can extend up to 30 years. This long tenure allows you to spread the loan repayment over a more extended period, reducing the burden of EMIs.
Real estate is considered a solid investment option. Over time the real estate price has increased and it will increase in the near future. So, investing at this time you will get an excellent return after 10 or 15 years.
If you purchase a second property or an investment property, you can earn rental income, which can help in servicing the home loan. Rental yields in many metropolitan cities in India are quite attractive, providing an additional source of income.
A home is a tangible asset that provides security and stability. Unlike other investments like stocks or mutual funds, real estate is a physical asset you can live in or rent out.
Owning a home gives you a sense of pride and accomplishment. It provides a stable living environment for your family and can be a legacy you pass down to future generations.
Real estate is seen as a good way to protect against inflation. When living costs rise, real estate values usually rise too.Buying a home now can shield you from inflation over time.
A home loan with a fixed interest rate keeps your EMI (Equated Monthly Installment) the same for the entire loan period. This stability means your financial commitment stays predictable, even if inflation goes up.
Conclusion
Getting a home loan now comes with many advantages like low interest rates, tax savings, and flexible repayment plans. Government support and a good market make it a great time to invest in a home. Buying a home not only offers financial benefits but also gives your family security, ownership, and stability. Understanding these benefits helps you make smart choices for a better financial future.
We EazyBankLoan understand the process of procuring a loan can be stressful. That is why we take care of your loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.
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| Benefit | Description |
|---|---|
| Lower Interest Rates | Historically low rates, reducing EMI burden |
| Tax Benefits | Deductions on principal and interest under Sections 80C, 24(b), and 80EE |
| Long Tenure & Flexible Repayment | Extended loan tenure, prepayment, and foreclosure options |
| Investment Opportunity | Real estate appreciation and rental income |
| Creating an Asset | Tangible asset and sense of ownership |
| Inflation Hedge | Protection against inflation and fixed EMIs |
You can avail tax benefits on both the principal repayment (up to ₹1.5 lakh under Section 80C) and the interest paid (up to ₹2 lakh under Section 24(b)). Additionally, first-time homebuyers can claim an extra ₹50,000 under Section 80EE.
Under the Pradhan Mantri Awas Yojana (PMAY), eligible homebuyers can get an interest subsidy of up to 3%, which reduces the effective home loan interest rate and overall cost of borrowing.
The documents required typically include identity proof, address proof, income proof (salary slips, ITR), bank statements, property documents, and a filled application form.
Regular and timely repayment of a home loan can improve your credit score, demonstrating your creditworthiness to future lenders.
The maximum tenure for a home loan can go up to 30 years, depending on the lender’s policies and the borrower’s age at the time of loan application.
Yes, many lenders offer home loans for under-construction properties. The loan disbursement is usually done in stages based on the construction progress.
Yes, under schemes like PMAY, eligible borrowers can avail of interest subsidies, reducing the effective cost of the home loan.
You can reduce your home loan interest burden by choosing a shorter tenure, making regular prepayments, opting for a balance transfer to a lower interest rate lender, and maintaining a good credit score.
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