Tips for First Time Home Buyers6 min read
Home Loans come with a ton of benefits for first-time home buyers as they can avail additional tax benefits on the interest repayment of the Home Loan as well as a tax benefit on the principal amount of loan. Moreover, the houses that are purchased under the credit linked scheme of Pradhan Mantri Awas Yojana get a cut on GST rate from 12% to 8%. An additional interest subsidy has been provided for loan tenure of 20 years against the existing limit of 15 years. So, along with numerous benefits, there are some factors that can affect your loan approval process. So, how to get a loan for a house? Here we go with the few Home Loan tips that first time buyers can consider before applying for a loan.
- Plan what you can afford
You may have affinity to a flat somewhere near your workplace, but the prices might hit hard on your pocket. So it is necessary to filter your options based on your budget and stick to them. This way, your personal finances too can be taken care of.
- Accumulate funds for down payment
Banks play a crucial role while buying a house but they only finance for about 85% of the loan amount. For instance, if your loan amount is Rs.80lakh, you will get a maximum amount of Rs.68lakh as a loan from the bank. The rest of the money has to be paid via down payment. It is generally advised to make a bigger down payment as it can lessen the EMI burden. So it is essential to plan finances well so that your routine expenses are not hampered.
- Know the basics of loans and your eligibility
It is important to know about the loan basics and eligibility criteria while applying for a loan beforehand to refrain from any last-minute surprises. If you are unaware of the banking procedures, it is highly recommended to be well equipped to avoid any discrepancies at the last moment.
A comparative study of the different rates that are offered by the banks should be done to get the best offer. Ideally the bank where you have a Salary Account is best to choose as they are aware of the salary details, thus making loan approval easy and convenient.
- Apply for a pre-approved home loan
The pre-approved loan is a sanction letter that is given by the bank after validating your entire documents about the loan amount that you are eligible for. The validity period for the sanction letter is six months within which the loan application should be made.
Getting a pre-approved loan helps first-time buyers to decide their budget for the property, thus making the process of filtration easier. A pre-approved loan also helps in carving out a plan for the down payment that they should gather to lessen the EMI amount.
- Choose the projects that are approved by the banks
Choosing the bank approved properties ensures that the property is free from any encumbrances. Banks approve a loan usually after having a precise security check of the property documents and authority approvals to avoid any builder scams. Projects that have been approved by the banks are easy for loan approval and disbursements.
- Know the tax benefit
It is crucial for the first-time home buyers to know the maximum tax benefits that they can claim from the first home loan. Home loans contribute to a major part of tax savings and it is essential to claim the due benefits during tax returns.
There are few banks which help you to apply for first time home buyer loan online. Before you finalize any home loans you should negotiate as you can save a lot with effective negotiation. Once you have saved for the down payment, you should keep a corpus amount aside to get set your furnishings, appliances and for your interiors. Finally, with these tips, you can realize your dream of owning a home come true.