Are Home Loans The Best Funding Option?

Most potential borrowers weigh this question from time to time. If you want a simple answer, it’s both – a yes and a no. The answer hardly looks simple; however, you must understand that a home loan is a financial product that has several components, which can affect your funds. How much is the interest rate? Is it floating or fixed interest rate? What type of repayment option have you selected? What is your credit score? Are your EMIs lesser than 30% of your family income?

Most of these questions are simple while their answers are not. You might want to opt for a housing loan at a fixed interest rate. However, are you aware that housing finance companies can change the fixed rates over a period of time? You might get a housing loan with reasonable EMIs. Yet, to enjoy a healthy financial life, you must ensure that the EMIs make up for less than 30% of your income for the next 20 to 30 years. Hence, as a product, it is the best funding option. Nonetheless, you would need a vigilant eye on your monthly cash flow to ensure that the EMI doesn’t affect your lifestyle and major life choices.

You must see this financial product holistically to make an opinion. Most Indian borrowers can easily save up to 30% of their income. So, if you can maintain the EMIs of your housing loan lower than that at all times, then you can lead a stress-free life. Since majority of the people are in their late twenties or thirties when they opt for home loans, it is easier to pay off the EMIs along with the increasing costs including kids, school fees, medical bills, etc.

If you have chosen a customized repayment scheme, then you must be able to keep up with that. Most professionals and business owners opt for accelerated repayment scheme, which allows them to increase their EMIs with a gradual growth in their income. Salaried employees, who have taken their housing finance at a floating interest rate, may find it difficult to pay the EMIs if the interest rates increase without a concurrent increase in their salary.

Thus, potential borrowers should not opt for a home loan in a rush. With a little patience and perseverance, you can find the housing finance that works best for you. Agreeably, it means that you should pay for the process with several lenders and that is a costly choice. However, since it is a long term financial agreement, you must enter it with caution. This funding option thus comes with customization for a reason. Use it well and you would be a proud home owner soon.

What Do The Best Home Loans In India Comprise Of?

The best home loans in India need a great credit score, advice from a finance expert, customization options and the right financial strategy. You cannot easily find the ideal housing finance in the country without these prerequisites.

A great credit score would allow you to meet the home loan eligibility criteria and complete the home loan process quickly. A finance expert will help you to identify the potential dangers and negotiate the interest rate and contract for you. A better interest rate should be negotiated for, with the representatives. The clauses in the fine print can also be adjusted to suit your present and future requirements if you have taken the required initiative to set the contract right. Most borrowers are enthusiastic about understanding the implications of the contract in applicable situations. You need to patiently study these contracts and ensure that you can oblige in future as well.

The right repayment strategy would ensure that you can afford to pay the EMIs on your housing loan when the interest rates are hiked. You must choose a repayment option for your home loan such as the accelerated repayment scheme, if it suits your earnings. So, it is simpler to manage your loan over a period of time if you have taken the necessary steps to protect your financial interests. That’s how you get to enjoy housing finance that would not threaten your financial life.

Right financial strategy for home loans is more about the borrowers and their lifestyle. It is not about the housing finance organization. You need the self-discipline to pay EMIs regularly. Whether the amount is 30% of your income or less, you need to set aside sufficient funds every month. It is not easy amongst the rising living expenses, leisure expenditures and unhealthy lifestyle choices. You must consult a finance expert to help you make the right choice. For example: You must use only 20% of your income on leisure expenses. Most borrowers spend too much at the wrong places to manage their EMIs capably.

If you don’t limit your expenses appropriately, you might find yourself in deep financial trouble in spite of having sufficient income. Your expenses and credit card expenses change the monthly cash flow dynamically. It would be hard for you to believe the look of your financial health. Hence, choose to pay attention to your monthly cash flow from the start. It might seem unnecessary but it would come in handy when the company would change the interest rate on your home loan; however your income wouldn’t.

The Pros And Cons Of Home Loans

A home loan, like any other financial transaction, has its own advantages and limitations, which is no surprise. However, what would surprise most people is that home loans can be used strategically to benefit your financial health. There are a few elements of the housing loan that can greatly affect your monthly cash flow and cause significant trouble in your paradise. Hence, you need to make the right choice to enjoy rich rewards.

How do you ensure that you enjoy all the benefits of housing loans ? You can reduce the amount of your taxable income by paying regular EMIs. The best way to go about this is to arrange your income, investments and EMIs strategically so as to minimize the due tax. If you apply jointly for your home loan along with your spouse, then both of you will be able to use this to your advantage.

Most of us are not in a position to utilize all our savings to buy our first property. Thus, housing finance companies provide easy home loans these days in order to allow individuals to purchase their dream home. This advantage is tied in with another unique benefit. The rent that people pay to live in someone else’s house is very similar to the EMIs that they would need to pay to possess a house. Most investors rent out their place in order to help themselves to pay the EMIs comfortably. If you can afford the rent, then you can afford the EMIs too. In other words, if you take the effort to meet the home loan eligibility criteria and complete the home loan process, you can have your own house. You can pay the EMIs to the housing finance company instead of paying rent to the landlord, thus enjoying the several benefits of owning a house such as capital appreciation.

The disadvantages of housing finance could be found in the contract document. If you have not customized the home loan to match your financial requirements, then you could land in serious financial trouble. For example: Whether you choose floating or fixed interest rates, the company can change them over a period of time. In other words, it can convert your EMIs into an amount that you can’t easily mange every month. The most common problem with interest rates is that you cannot anticipate or control this change.

In addition, there are several other factors such the fine print of the contract that can be a potential financial landmine. Could you pay a larger amount and finish this loan sooner? It may not seem so, unless you have ensured that while signing the contract. A professional finance expert can help you to take a suitable home loan. You might require this kind of help to create a contract to safeguard your interests.

A House Loan Is The Ideal Finance Option Available

When it comes to home finance, the most common reaction is the feeling of fear and concern. It is no wonder then that quite a few people miss the benefits of home loans . Today’s housing market is thought to be rather volatile. However, this industry is still a great option for valuable long term investment. In fact, if you are looking to buy your own place, the real estate in small cities is a promising investment opportunity. As many newspaper articles now rightly state that two tier cities like Dehradun, Bhopal, and Hubli etc witness ample growth.

The best choice for housing plans lies across India. One can buy the right property with the help of the right finance tool – the home loan, which has several benefits. When you are paying the home loan EMIs, you can deduct these payments from your annual income for the income tax calculation in that financial year. Hence, the tax that you would pay will be much lower than usual.

The next advantage is that home loans can be customized to suit your monthly income and spends. In other words, you can opt for accelerated repayment schemes, if you wish to finish off the loan as soon as possible. Thus, you can create the repayment plan according to your cash flow status. Hence, you might be able to make all your repayments without any major hassles or concerns. Your finances can certainly be strengthened with the right repayment strategy.

It’s difficult to understand this benefit until you go through the home loan eligibility criteria and the complete home loan process, which is customized to suit your financial needs. For example: As a doctor, you would need your home in your early twenties and you will start seeing major earnings in your late thirties. You can customize your loan to pay your EMIs accordingly. However, it might be tad difficult to pursue major nationalized banks to offer you the home loan in India because at times, even business owners, professionals and entrepreneurs fail to qualify their stringent criteria. However, private housing finance companies in India are more flexible and offer faster house loans to this community.

Your home also helps you to enjoy capital appreciation over a period of time. Thirdly, most people are concerned with these regular repayments. They think that they can avoid these repayments by avoiding the housing loan. However, whether you pay your rent or you pay EMIs, similar amounts would go out of your bank account. It is, hence, much smarter to invest that money into your own property rather than offering it as rent to someone else. So, convert your rent payments into EMIs to earn the privilege of owning a property. Make the most of these housing loans in India.