Home Loans – The smartest way to structure your finances

In today’s age, where unlimited investment opportunities with varied pros and cons are accessible; it is essential to be extremely wise about your financial decisions. The need to structure your finances smartly has become important since the cost of living is on the rise.

Home Loan is one such decision that needs to be made carefully as it is one of those choices that integrate sentimental values and high risk finances.

The term ‘settled’ often encompasses a self-owned home, as it denotes a sense of belonging. Home is where a person can unabashedly be himself/herself. No matter where you are, serenity prevails when you step into your home. Knowing that you can come back to a house you call home, is both relaxing and elevating. In short:

“Shehar Me apna Ghar hoh toh, shehar bhi apna lagta hai”
(If you own a house in the city, the city also feels like your own)

Housing Loans – A smarter decision

When you consider any investment portfolio, a housing loan will stand tall among other investments in the ratio of Returns, Tax benefits and Risk. Even considering that a home loan will consume a large percentage of your investment budget with its down payment and monthly installments, turns out to be a beneficiary deal.

To begin with, the Tax benefit on Home loans is better in comparison to any other short term or long term investment. A home loan comes with multiple tax benefits that significantly reduces the tax outflow.

Mentioned below is an overview of the tax deductions that can be claimed for a Home Loan:

Benefits on the Interest Paid on Housing Loan

The EMI on a housing loan has two components – the principal repayment, and the interest payment. A deduction of maximum Rs 2 lakhs can be claimed on the interest portion of the EMI paid for the year from the total income of the year.

Benefits on the Principal Repayment

Tax deduction up to Rs 1.5 lakhs under section 80 C can be claimed on the principal portion of the EMI paid for the year. This deduction can only be claimed if the house property is not sold until 5 years of possession. Otherwise the deducted claim is added back to the income in the year of sale.

Benefits for the Stamp Duty and Registration Charges

A deduction for stamp duty and registration charges can be claimed only for the year in which these expenses are paid.

Benefits for first time Home Buyers

First time home buyers can claim an additional deduction of up to Rs 50,000 on home loan interest payments under section 80EE for the FY 2017-18 / AY 2018-19. However, the criteria for deduction are: 1. The home loan should have been sanctioned during / after FY 2016-17.

  1. The loan amount should be less than Rs 35 Lakh.
  2. The value of the house should not be more than Rs 50 Lakh & the home buyer should not have any other existing residential house in their name.

Benefits for Joint Home Loan

Under section 80C, the joint home loan holders can claim a deduction up to Rs 2 Lakhs each on Home loan interest, and Rs 1.5 lakhs each on principal repayment in their individual tax returns. To claim this, the Loan holders should be the co-owners of the property taken on loan.

Attractive Interest Rates

The interest rates on housing loans are already lesser than for any other loan. Moreover, Indiabulls Home Loans offers an extremely feasible, industry best 8.35% interest rate.

Additional to the tax benefits, further concessional interest rates are offered to women beneficiaries. To facilitate home for all, an Interest subvention is introduced for eligible borrowers as per PMAY guidelines under affordable segment.

How to make a smart decision?

The accessibility of Housing Loans is getting simpler by the day, and so are the chances of making a mistake around it. People often overlook the bigger picture while taking a loan and hasty decisions leave them in a financial fix.

Please note that it is not just the EMIs that you pay, but you manage your regular expenses and pay the EMI.  It is preferable to plan Home Loan EMIs in a way that they do not pose any financial crisis to household. So the affordability of a loan does not depend on how much you earn but on a certain percentage of your earnings.  Usually the Total EMIs of every loan should not exceed 40% – 45% of your Total Income.

If you are still skeptical about a home loan’s benefits vs. the hassles for taking a loan; Indiabulls Home Loans has a solution for you. Check your eligibility and apply for a home loan online in just three easy steps.

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