Buying a house is a big decision that requires careful thought and consideration. There are many different factors to think about when you contemplate buying a house. From deciding the loan amount, to ownership and other financial aspects, it’s a decision you shouldn’t take lightly.
Let us help you by giving you some useful tips on buying that dream home.
Single and thinking of buying a house? Here’s some advice you could use.
- Can you really afford it?
Evaluate your finances carefully and decide whether getting a house is a feasible option. Consider all the related expenses that come with owning your own house. The idea is very tempting and spells independence in big, bold letters, but don’t be hasty. Figure out whether you have enough funds for the down payment, find out what loan amount are you eligible for based on your income and what EMI amount can you afford to pay.
- Look for special deals on a Home Loan
If you’re single and getting a Home Loan on a single income, look for loans that offer lower interest rates. Please note that there are special rates for women.
- Don’t house hunt alone
Buying a home is a major investment. Keep some trusted people in the loop about your home buying decisions. Brainstorm with them and get advice on the various aspects of buying a house.
- Plan for the future
When you consider buying a house, plan for the future too. What if you get married, have kids or have to relocate for a job? These are important considerations which come with their own set of expenses. It is important to be financially prepared before you commit to buying a house.
Recently married and looking to set up your own home? Here are four benefits of joint ownership of property with your spouse.
If you have a co-applicant for your Home Loan, the debt is shared between two people. What’s more, a joint application allows you to get a larger loan amount.
- Tax Benefits
Beat the taxman twice over by choosing to get a Home Loan together with your spouse. All joint applicants are allowed to claim tax deductions of Rs. 1,50,000 for repayment of the principal amount under Section 80C of the Income Tax Act. A co-applicant will also be eligible to claim deductions up to Rs. 2,00,000 for the interest component of the loan under Section 24 of the Income Tax Act. If you have a joint Home Loan, both applicants can avail tax benefits proportionately.
- Stamp Duty
In some Indian states, women are encouraged to own property either individually or jointly. Women can avail of lower rates on the Stamp Duty payable on a Home Loan. Let’s give you an example. In Delhi, women owners need to pay 4% and men are required to pay 6% of the property’s market value as Stamp Duty.
In case a property is jointly owned, the question of succession is easily answered in the event of the demise of one of the owners. The property would be passed on to the surviving second owner.
So go ahead and opt for joint ownership of your property and make your house a home.
Additional Reading: Understanding The Terms Associated With Home Loans
If you’re a new parent, looking for the perfect home to make your growing family comfortable is very important. Here are a few handy tips to make the transition to parenthood smooth for you.
- Budget New Expenses
With the new expenses related to having a baby in the family, the payment of the down payment on your house needs careful thought. Also, make sure that your Home Loan EMI can be paid easily enough, taking into account any extra expenses you might have.
- Time Your Date of Possession
It would be best if you could plan the possession of your house before the arrival of your little one. Juggling a new baby and moving into a new home is no easy task. Plan ahead so that you are settled in by the time your baby arrives.
- Evaluate Distances From Offices, Schools & Hospitals
It is important to choose a property that is located in close proximity to your workplace, reputed schools, and hospitals.
- Plan the Layout of Your Home
A new baby in the family is a huge change for the new parents. You will need more space to store the baby’s stuff, from clothes and furniture to toys and play things. A house that has a dedicated nursery for the child would be a good idea. Choose a house that is child-friendly.
A Reverse Mortgage Loan for Senior Citizens
A reverse mortgage scheme offers an income opportunity for senior citizens.
- What’s that, you ask?
The Government of India introduced the Reverse Mortgage Scheme in 2008 to help senior citizens who own a house but don’t want to sell the property.
- How does it help?
The scheme allows the elderly property owners to increase their regular cash flow. With the reverse mortgage scheme, the borrower gets money on a regular basis based on the value of their home. This is paid in periodic instalments and is paid in entirety later.
- How is the loan amount decided?
The amount of loan will be based on the value of the property after taking a 10%-30% margin into account. The loan amount also depends on:
- the age of the borrower
- the interest rate agreed upon between the bank and the applicant
Most banks peg the maximum loan amount at Rs. 1 crore. You can choose to receive the income on a monthly, quarterly, or annual basis. Need a lump sum payment? A lump sum payment is capped at the lower end of 50% of the total amount that the applicant is eligible for or Rs. 15 lakhs. This is allotted for the purpose of medical expenses of the borrower, their spouse, or a dependent person.
- What can the borrowed money be used for?
The money that is borrowed under this scheme can be utilised for a medical emergency, daily essential expenses, and repairs or renovations of the property. You can also use part of the lump sum amount for the repayment of a loan taken on the property.
Application & Documents
- Who can apply?
A senior citizen over the age of 60 years, who is the owner of a residential property, is eligible to apply for the Reverse Mortgage Scheme.
- Joint applications for the scheme
A senior citizen applicant can apply jointly with their spouse as the co-applicant. For a joint application, the spouse must be over the age of 55 years.
- Understanding the application requirements
A leased residential or commercial property cannot be offered as collateral for the loan. In case the property has an outstanding loan attached to it, the property cannot be used until the loan is cleared.
- Documents required
You will need these documents to be submitted with your loan application.
- a copy of your PAN card
- a list of legal heirs
- a copy of your registered last will & testament
- documents relating to the mortgaged property
If you make any amendments to your will, you will need to inform the lender about these changes.
Tenure, Interest Rate & Repayment of the Loan
- Tenure of the loan
A Reverse Mortgage Loan is sanctioned for a maximum of 20 years. During this period, the borrower can receive payments and can continue staying in the house after the period, for their lifetime. This also applies to the borrower’s spouse.
- Rate of interest
The rate of interest offered varies from bank to bank.
- Prepayment of the loan
If you decide to close the loan, you can prepay the outstanding amount at any time. There are no prepayment charges.
After the demise of the borrower and their spouse, the legal heirs can rightfully claim the property after payment of the outstanding amount on the loan. In the event that the legal heirs do not lay claim to the property, the bank can sell the house and pass on the surplus proceeds of the sale, after adjusting the dues on the loan, to the legal heirs.
Now that you are well-informed with these tips on buying your home, are you ready to take that Home Loan?