5 Tips You Must Not Miss If You Are A First Time Home Buyer

Buying a home is probably one of the biggest investment decisions that you will have to make. This is especially true for a first time buyer, for whom investing in property in India is a trepidation-filled decision. While the financing options are aplenty, the loopholes that you may succumb to also abound. Nevertheless, with these home loan tips, first-time buyers can make smarter decisions:

1. Pick the best of the lot – The home loans available today appear to be so attractive that most first-time buyers may end up choosing one at face value. However, if you were to compare home loan rates among those available, chances are that you will find something that is more suited to your needs than all others. So, research well and get all your doubts clarified before making an informed decision.

2. Don't be shortsighted – One of the common pitfalls that most first-time buyers of residential projects in India seem to overlook is the trade-off between tenure and EMI payment. So, here are a few home loan tips. It seems convenient to settle for the longest loan tenure where the monthly EMI is lesser. However, if you were to use a home loan calculator, you might be surprised to know that even though you are paying a smaller amount every month, but over the years, you have been allowing the bank to make more money off you. For the same loan amount and interest rate, you may end up paying 30-40 % more than what you will for shorter loan tenures. These tips for applying for a home loan, however, should applied based on your income potential.

3. Don't over-tax yourself – Updating yourself about the different tax implications is actually one of the first home loan tips that you must consider. Under Sec 80C of the IT Act, home loan principal payment up to Rs 1.5 lakhs is deductible from the taxable income. This is allowed only for a fully constructed house. In addition, you are eligible for a deduction of up to Rs 2 lakhs (Sec 24) if you are living in the house. However, if the house has been rented out, you can claim full deduction on the interest paid.

4. Set your own terms – Did you know that you might be in a position to negotiate on the rate of interest even if you have already finalized a property for sale in India? If you want to get your loan passed urgently, try approaching the banks towards the end of the month. Chances are that the salespersons might agree to give you a favourable interest rate, along with several other benefits.

5. Fixing on the right amount – Before you get down to setting a figure on your home loan, do consider all the other hidden charges that are included in the amount that has been sanctioned. These additional charges usually fall under the administrative or processing fees, service charges, etc. The final take home amount that you receive from the bank will be calculated after deducting these charges.

With these smart home loan tips in India, you will be in a better position to make your first big investment in the residential real estate sector!