Many of us have dreams of buying a home at some point of our lives. Many of the people give up trying believing that real estate prices will not come down. This is a misconception as realty prices also go down, but the decline is slow instead of sharp. In this post about home loan in Delhi NCR I shall discuss more.
Thus, the decision to purchase your first residential property should not be solely based on your emotions. You need to think practically. A house, in addition to being a long-term asset, makes you entitled for major tax benefits. You can assert for deduction up to Rs 1.5 lakh for home loan repayment principal under the general limit of Section 80C of the Income Tax Act.
Furthermore, you can claim an extra deduction under Section 24B of around Rs 1.5 lakh for interest payment once you get ownership and dwell in the house. If you take a joint loan along with your spouse then both of you can claim these deductions on your own, therefore your tax savings will be optimized more.
One of the major parameters important your home purchase budget is how much do you currently have and how much you would have to borrow from bank in the form of a home loan. These days most of the houses or flats in major cities will cost at least a crore if not more. In smaller cities this budget might put you well in luxury section. Irrespective of the home buyer‘s category, purchasing home first time is typically a stretch on an person’s private finances.
Here you are likely to exhaust all your savings towards the down payment and on the other side you will take a home loan for the balance, the EMIs will add to your monthly expenses. Hence, you should run your own numbers pragmatically before committing to your for first home purchase.
One of the elements, most first-time home purchasers are typically concerned with is the loan amount. Usually 46 times of your annual take home is considered as the eligible home loan amount with maximum 80% of home purchase value. However, there are many other factors that can impact your home loan eligibility.
It is best to check with your home loan provider for exact details. The other important factor is the amount of EMI towards home loan. If you take a loan of Rs. 1.5 crores at 10.5% p.a your EMI will be Rs 1.37 crores for 30 years, Rs1.50 lakhs for20 years, 1.66 lakhs for 15 years. So your EMI is lower than all in first scenario as it will take the longest time compared to others. It means you will be paying more interest in scenario 1 than the other two scenarios. Interest in scenario 1 will be 3.44 crores, scenario 2 will be Rs 2.1 crores and scenario 3 will be 1.48 crores.
So which to choose? If you are experienced and have confidence that you can generate more interest then select the longest term and invest the differential to grow your portfolio more. Otherwise stick to shorter tenure loans and save your interest costs.