Like in 2019, 2020 or even in 2021, the most crucial element in buying a house lies in the planning involved. With the right planning and approach from your part, you can save money when buying a house in 2020. We understand how much of an exciting as well as emotional process it is for you when it comes to buying your dream home. Therefore, we hope that the following points will help you with your planning process, and to make wallet-friendly decisions that will benefit both you and your family.
Know how to save tax on Home loans
- Opt for a home loan that comes with tax-saving advantages
- While applying for a home loan, having a woman co-applicant as the first borrower will bring down interest rates.
- The loan eligibility will be high if both the spouses are employed and apply for a loan jointly.
- Moreover, both the co-applicants can claim tax deductions of up to Rs 1.5 lakhs each against the principal repaid, under Section 80C and can also claim up to Rs 2 lakhs each against the interest paid, under Section 24B.
Choose a bank with low interest rates
- While almost all banks today, grant home loans at competitive rates – it is crucial to opt for a bank that offers the lowest interest rates.
- Experts say that banks offer reduced interest rates (often varying from 0.01% to 0.15%) for female borrowers, which can make a huge difference considering that tenure will be usually in the range of 15 – 25 years.
Avail the benefits of Pradhan Minister Awas Yojana (PMAY)
- The Pradhan Mantri Awas Yojana (PMAY) launched to help citizens to avail affordable homes at subsidized rates is a great way for first-time homebuyers to save money.
- The Credit-Linked Subsidy Scheme (CLSS) under PMAY can get you interest subsidy benefits of up to Rs 2.67 lakhs against your home loan.
Think before buying a home loan insurance from the lender
- When opting for a home loan through a bank, always remember that there is no obligation to opt for an insurance cover at the same time.
- Purchasing insurance is always at the sole discretion of the buyer and neither the law or the RBI or IRDAI have made it a mandatory process. It is best to always purchase insurance at a later stage, through any insurance company.
- Since a home loan insurance policy bundled with your home loan generally involves a single premium, you will not be able to port your insurance if and when you wish to switch your lender later.
Beware of the spread on your home loan interest
- Unless specifically mentioned in the agreement, the spread unlike interest rates does not fluctuate over the tenure of the loan – irrespective of the changes in repo rates and market conditions.
- Even though the spread on the loan, vary from bank to bank, and is often based on the different schemes offered by the bank – it is wise to select the lender with the lowest spread.
Explore under-construction properties
- Buying a house that is still under construction or one that needs finishing work, is financially a better option than ready to move-in houses. The developer’s track record and financial credibility remain extremely important considerations, especially if you’re looking at a newly launched / under-construction project.
- Always remember to check the RERA registration and record of the developer, while purchasing an under-construction home.