Labh Lakshmi

Home Loan Basics

Buying a home, especially with a home loan, has huge tax implications for the homebuyer. Here is an overview of the tax laws and how they impact the home buyer No matter how much you write on the subject of Income Tax, the subject remains as complicated as ever before. Hence, here, the aim is to be as concise as possible without making the issue too complicated.

However, this is just for a broad level understanding of the subject. For taking any decisions it is recommended that you take the advice of a qualified tax practitioner.

Home Loan Basics

Act in haste, repent at leisure. This adage might as well apply to a home loan seeker just as much as to a bridegroom. Here are 7 golden rules which will ensure that you do not repent in future.

1: Never choose a lender till the property is identified.

Home Loan Basics

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What are the documents required to apply for a home loan?

Home Loan Basics

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Which interest rate fixed or floating?

When applying for a home loan, opting for interest rates is a cause of dilemma. Should one opt for ‘floating’ or ‘fixed’ rates of interest?

Interest rates have been fluctuating since the last 6 years, so much so that the consumer is not sure of the future.

In March 2000, the interest rates on home loans were about 14%; which started falling quite steeply. By the last quarter of 2003, the interest rate (floating) on home loans fell to 7%. Again the loan interest waves have splashed to a high of around 10.00% (floating rate of interest) in January 2007. This hike is dramatic; considering that it is a jump of 3.50% since the historic low of 7% reached in 2003.

Home Loan Basics – 6

Now that you have selected the property and have an idea about your loan eligibility, the next step is to apply for the home loan. The tips below help you make the home loan process least painful.

The home loan roadmap

The process of taking a home loan can be daunting, especially if you have never applied for any loan earlier. And ignorance on your part can not only make it an unpleasant experience, but also prove to be costly. Here is a step-by-step guide to equip you with the right info, so you know what to expect.

Home Loan Basics – 5

What is a pre-approved property? Does the bank guarantee the timely construction of the property in such a case?

Many large builders get their properties approved by specific banks. What this means is that the bank examines the legal documents of title of that builder and finds them in order.

These title documents are also put on record in a common file at the bank and hence, whenever any buyer wishes to buy a flat in that property, the bank need not do a due diligence on the property title again.

Home Loan Basics

The loan amount sanctioned depends on a host of factors. Primarily, it depends on your income and repayment track records. But besides that, the cost of the property

to be purchased is also a deciding factor. So, while you are looking for a home loan lender, simultaneously make concrete efforts to identify a property.

Your ability to repay your housing loan is based on your income and expenditure pattern. For instance, if your monthly income is Rs 10,000, and your monthly expense is Rs 8,000, you can certainly pay Rs 2,000 towards any potential home loan you take.

Home Loan Basics- 3

The cost of the property you are planning to buy has a direct impact on your loan eligibility. The bank which finances your house purchase naturally wants you to put in a contribution towards the cost of the house so that you have a stake in its continued maintenance.

This also ensures that if the value of the house goes down in future, the bank’s outstanding loan amount is lower than the market value of the property. Hence, if a house costs Rs 5 lakh, the bank may require you to fund at least Rs 50,000 to Rs 75,000 from your own sources, while the remaining Rs 4,25,000 – Rs 4,50,000 is provided as loan subject to your eligibility. The amount you are expected to put in is called margin money or down payment.

Home Loan Basics

Banks do not provide the entire amount you need to buy your home. You need to put up a certain part of the purchase cost from your side as well. Here is how to put together your initial down payment.

Home Loan Basics

The first step towards buying a property starts from being able to identify the one that suits your needs. With a large number of builders competing with each other to get your attention (and your money, too), there is a wide range of choice available.