Housing loans are taking off in India. Many individuals with dreams of owning a home are now opting for these lucrative finance solutions. They make it easy to purchase a home in India, even though the price of property puts homeownership out of reach for most. At the same time, many borrowers disregard such loans afraid of falling into debt. They’d rather save up for years rather than paying EMIs for up to 360 months. Having said this, the following article will highlight some important points you should keep in mind before deciding for or against taking a home loan in India.
1. Today’s interest rates are extremely low!
As of now, housing loan interest rates are extremely low. In fact, they are among the lowest they’ve ever been in the entire history of home loans in India. What’s more is that the RBI has reduced its repo rate by 5 BPS twice in the last few months; this should further bring down the rates. Today, you can avail a home loan at an interest rate as low as 8.30%.
2. PMAY CLSS Scheme.
The Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme, or PMAY CLSS, is one of the latest gambits introduced by the government to make it all the easier for you to own a home using housing loan. Under this scheme, Medium Income Groups, that is households with an annual income lower than 18 lakhs, can avail a subsidy of up to 2.63 lakhs on home loans. So if your household income does not amount to Rs. 18 lakh per annum, it makes sense to make use of this lucrative savings tool!
3. Women get lower rates.
With home loans in India, women borrowers have access to lowered rates as compared to men. They are offered a straight 0.05% discount on normal rates. However, even men can avail of this benefit; all they have to do is co-borrower with a woman. This means that, if your mom, sister, wife or daughter signs as a co-applicant, you can expect a reduction of 0.05% on your rate. This will help you save a considerable amount of money in the long run. Moreover, women also get discounts on stamp duty in a number of Indian states further adding to your savings.
4. Tax benefits of a home loan.
Another important thing you need to about home loans in India is the fact that they bring tax savings to the table. They help you significantly reduce your taxable income and ensure you pay much less tax than you should. By significant we mean deductions up to Rs. 3, 50,000 on your taxable income. If you borrow jointly, these savings are applicable separately for you and you co-borrowers, essentially resulting in deductions on your taxable income to the tune of Rs. 7, 00,000. This is possible under sections 80C & 24 of the Indian Income Tax Act, which allow deductions of Rs. 1, 50,000 on the principal repayment amount & Rs. 2, 00,000 on the interest paid, respectively.
These are some things you should know before you go against or opt for a housing loan in India. Hope this article will help you make an informed decision. Good luck and all the best for your new home!