Indisputably,
owning the roof over your head is one of the biggest moments in your life. But,
uptil now, the rising prices have deterred you from acquiring your dream home.
However, with the hordes of banks and housing finance companies (HFCs) jumping
into the home loan market, it’s become quite a cakewalk to your personal
sanctuary. So if you’ve spotted the right property, take the plunge. It
will not only make you the proud owner of a spanking new house, but get you that
much needed tax relief as well.
All for
you
Usually, banks and HFCs finance
around 85 per cent of the cost of the property. This will include various
charges such as agreement value of the property, stamp duty and registration
charges, society transfer charges, garage charges for parking cars, electricity
and water connection charges, as well as the cost of additional furnishings done
by the developer or builder, apart from the cost of the property. But remember,
you have to sign an amenities agreement, duly stamped and registered, entered
into between you and the bank. Nevertheless, there are a few banks that offer
100 per cent or even more finance for your dream home without any extra effort
from your side.
Falling
short of the green stuff?
Getting a
personal loan for the margin money is also possible if it gets difficult for you
to acquire 100 per cent financing from the banks. There has been an upswing in
the personal banking sector in addressing the demand for such loans. So, as the
banks are also aggressively marketing their personal loan products, draw 15 per
cent of the cost of your dream haven from
it.
But, as against home loans, the
interest rates are quite high in the case of personal loans, and you should be
geared up to shell out extra bucks as interest costs. While you might be paying
an interest of seven to nine per cent of interest on home loans, the interest
rate may shoot up to around 20 per cent on personal loans.
Top-up time
If you have it, you can use it. That
is, if you have liquid funds, you can always use them for the down payment. But,
in case you don’t want to block that amount, you may take a top-up loan
offered by most banking companies.
As top-up loans can have interest
rates lower than the rate of existing loans, they can also lower the interest
costs on the whole, owing to the ongoing downward fall in interest rates.
Furthermore, at times, while offering top-up loans, banks take the current
market price of the property into consideration as the floor price and with the
recent upswing in real estate market, there is a constant upward trial in
property prices.
Step
up
Helpful to know to lessen the
burden while going for a smaller loan for the margin money is the fact that one
could go for a step-up home loan. This particular home loan product will let you
pay slowly in gradually increasing instalments, as opposed to equal repayment
instalments under the usual plans. Thus, while your loan for the down payment
portion is still in process, a lesser EMI for the home loan might prove to be
truly useful.
Do it
up!
Sure, the personal loan is an
easy alternative. But also check out the home improvement loan schemes. They can
be a painless and gainful way of acquiring loans to do up your shelter. Usually,
the interest rates on home extension or home renovation or home improvement
loans are only slightly higher, about 0.5 to one per cent higher than home loan
rates. So aren’t you really saving a lot?
At times, full payment is not asked
for immediately when the ownership of your shelter is some time away. You may be
asked to pay only 15 to 20 per cent of the property cost at the time of
possession. In such a case, prior to taking possession, you can easily take a
home loan of up to 85 per cent of the property cost and pay the remaining amount
by taking the home improvement loan. But remember, when you are applying for a
home improvement loan, you need a certificate from an architect or a civil
engineer specifying the essential mending or reconstruction work that will be on
the property.
Renting
truth
Owning your roof, instead of
living under a rented roof is always a desirable option. That’s because
the amount of money you spend on rent could be about the same or less than the
amount that you pay as a home loan installment.
The savings can really be
significant when one considers the tax benefits for homeowners. So, the post-tax
cost difference between owning a home through the loan route and renting a home
is reducing. With the tax savings on housing loans the installment payment is
less than the rental payment after few years.
The sour
cut
With the hike in interest rates,
the two most important factors to look for are the equated monthly instalment
(EMI) payment structure and prepayment terms. So, to choose the best deal,
compare the rate with the market rate.
The loan repayment could possibly
come to irk you even if you are snoozing away in your home. Thus, before
plunging into the idea of owning your shelter, determine your refunding
competence first!
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