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Buy Your Dream Home with Ease This Gudi Padwa

5 MinsApril 1, 2019

A house is a basic need of every family. This isn’t only a financial goal, but an emotional one as well. Earlier, the family first needed to save and invest their hard-earned money wisely to build a corpus or be wealthy enough to buy or construct their house. But that’s not the case anymore.

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Today, home loans have come to your aid, enabling you to make your dream come true quickly. All you need to do is be ready with the down payment and approach the bank. And to get the right home loan deal, here are few tips for you:

  • Tip #1: Maintain a healthy credit score – Higher the credit score, the better it is.
  • Tip #2: Maintain good financial health – Shape-up your personal finances; start saving and investing systematically to pay the down payment.
  • Tip #3: Be objective in your approach – Recognise your needs, assess your home loan eligibility, and borrow accordingly.
  • Tip #4: Conduct thorough research – Pay close attention to the rate of interest, processing fee, and other hidden costs.
  • Tip #5: Choose your home loan tenure carefully – A shorter tenure increases your Equated Monthly Instalment (EMI), while a longer one reduces it.
  • Tip #6: Assess how much the interest outgo would be – The interest rate is also a deciding factor for your home loan EMI. Higher the interest rate, higher your EMI will be and vice-versa.
  • Tip #7: Read the fine print – Make sure you read the terms & conditions of your agreements (home loan and purchase deed) carefully.
  • Tip #8: Make hay while the sun shines – Don’t miss out on certain tangible offers during festive times.

Gudi Padwa, which marks the beginning of the New Year as per the Hindu calendar and the onset of spring, is one of the auspicious muhurats to buy your dream house. Currently, builders/developers, in some regions for certain projects, are offering free parking, free clubhouse membership, free gold coins, free home appliances, flat discounts, etc., making the deal irresistible. However, before you zero in, make sure the project is registered under the Real Estate Regulation Act (RERA) and is in the approved list of projects of the bank.

Which is potentially the best home loan option?

Axis Bank’s ‘QuikPay Home Loan’ will enable you to save a substantial amount as interest outgo. And as the name goes, compared to a typical or regular home loan, you can repay your home loan faster under ‘QuikPay Home Loan’.

How is the home loan repaid faster?

‘QuikPay Home Loan’ offers an alternative repayment structure, where you repay an equal amount of the principal, i.e. a fixed amount every month along with reducing interest on the outstanding balance. Therefore, unlike a typical or a regular home loan, the home loan EMIs goes on reducing every month and you ultimately repay the loan more comfortably.

Say, you opt for a home loan to the tune of Rs 50 lakh for 20 years tenure, and even if interest rates go up to 9.20%, you would still benefit. As exhibited by the table above, the total interest outgo under ‘QuikPay Home Loan’ stands reduced to Rs lakh 46.19.

On the other hand, if you opt for a regular home loan for the same amount @9.00% p.a. for home loan tenure of 20 years, here’s how the math works: Under a regular home loan, your EMIs remain fixed every month throughout the home loan tenure. The total interest outgo works out to Rs 57.96 lakh (higher than under ‘QuikPay Home Loan’) and your total repayment Rs 1.08 crore (higher than under ‘QuikPay Home Loan’). And mind you, these calculations are assumed at a rate of interest of 9.00% p.a.; so if interest rates on home loans go up, these figures could increase as well.

Therefore, with a ‘QuikPay Home Loan,’ you stand to gain by saving Rs 11.77 lakh even with a marginally higher rate of interest. This makes ‘QuikPay Home Loan’ attractive for every home loan buyer and with attractive discounts and offers from builders, even more. To know how much you can save on opting for a QuikPay Home Loan, use this calculator.

Who can avail of a QuikPay Home Loan?

Both resident and Non-Resident Indian can avail of a QuikPay home loan. Salaried individuals, professionals, and self-employed individuals are eligible. To know the documentation involved, click here.

To determine your home loan eligibility, use Axis Bank’s Home Loan Eligibility Calculator. It’s an online tool to help you assess your home loan eligibility depending on factors such as your age, monthly income, credit history, and so on.

The loan can be availed to purchase the house (irrespective whether ready, resale, or under construction), to construct a new house, for an extension or renovation of the house, and even for transferring your existing home loan from another bank / financial institution to Axis Bank.

Once the home loan is availed, are prepayments and foreclosure possible?

Yes. There are no charges for part prepayment or foreclosure on floating rate home loans. The monthly instalment will reduce on making a part prepayment along with the total loan outstanding

Is there a tax benefit?

The principal portion of the home loan EMI is eligible for a deduction under Section 80C of the Income-tax Act, 1961, subject to a maximum limit of Rs 1.50 lakh.

If you are a “first-time home buyer”, you can even claim an additional deduction upto Rs 50,000 under Section 80EE subject to certain conditions.

The additional deduction under Section 80EE can be availed after first exhausting the limit under Section 24(b) for the interest portion. Section 24(b) of the Income-tax Act, 1961, allows a deduction for the interest component of the home loan EMI. For a self-occupied property, the deduction under Section 24(b) is Rs 2.00 lakh per annum. And in case the house is let-out on rent, i.e. it is a Let-Out Property (LOP), the actual interest payable is eligible for deduction under Section 24(b), thereby not being subject to any maximum limit.

Similarly, if you have taken a loan for the purpose of reconstructing, repairing or renewing the property, the amount of deduction under Section 24(b), you are eligible for will be restricted to Rs 30,000, irrespective of whether you want to stay in it or let it out on rent.

Final word…

Owning a house provides a sense of financial security, and a home loan is the best way to build your asset by handling the liability sensibly.

Apply for ‘QuikPay Home Loan’ today and fulfil your dream of buying a house this Gudi Padwa.

Happy Gudi Padwa!

Disclaimer: This article has been authored by PersonalFN, Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.

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