Thinking of taking out a home loan during the holiday season? Follow this checklist
The holiday season in India begins in October and culminates in November with the celebration of Diwali. This season is very popular with consumers as it is known for its significant offers on home goods and electronics, as well as real estate and automobiles. The real estate market especially sees sales growth during the holiday season, as most people see it as a good time for a big investment. This season is a win-win for home sellers and buyers alike, as buyers can take advantage of the best holiday deals and real estate developers enjoy huge sales volume.
But buying a house is not as easy as it looks. It’s more than just browsing real estate websites and brochures. It’s a huge investment, so most people only approach it after careful consideration. Sometimes it can be confusing to choose between the many options, especially as real estate agents will be trying to market their own projects. It’s also scary if you plan to take out a loan to finance the house. If you’re thinking about buying your dream home this holiday season, we’ve got a checklist of things to consider before taking out a home loan.
1. Planning of IMEs:
Most consumers are wary of repayments when it comes to home loans. It is natural to feel uncertain when making such a huge investment. The holiday season reduces this stress as lenders typically offer flexible payment options during this time. However, you need to make sure that you don’t get carried away by the prospect of a large loan and possible tax benefits. After all, you should be able to repay the IMEs. Before applying for a home loan, you can check your offered IMEs using a home loan calculator.
If you want to buy a new home through a home loan, you need to start saving for the down payment amount. Down payments must be paid up front while taking out a home loan. Banks can ask for up to 20% of the value of the property in advance before sanctioning a home loan. Financial advisers advise borrowers to opt for a maximum down payment amount to keep EMIs low. Borrowers should also set aside money, in addition to the down payment, to pay the GST and stamp duty on the purchase of a home.
3. Emergency fund:
Since you will be spending a large portion of your income on your new home, you need to secure an emergency fund for any untoward incidents. The emergency fund will keep you prepared for future demands.
4. Do your research before taking out a home loan:
Home loans are an important part of buying a home and hence the borrower should research and compare various mortgage online before committing to one. At present, various lenders offer convenient and user-friendly home loans for borrowers. When choosing a home loan, there are some important factors to keep in mind:
Factors to consider before taking out a home loan
- Interest rate: One of the important factors to consider before taking out a home loan is the mortgage interest rate offered by the lender. Borrowers can check the mortgage interest rate beforehand. A low interest rate allows the borrower to easily repay his mortgage.
- CIBIL Note: The CIBIL score determines a borrower’s ability to repay the loan. Maintaining a decent credit rating could go a long way in getting good loan deals.
- Flexible refunds: When taking a mortgage online, it is necessary to look for a mortgage that offers flexible repayments. There are different types of repayment programs that a borrower can look for before choosing a home loan. A flexible repayment policy is a huge benefit for the borrower as it makes it easier to repay the mortgage.
- Attractive offers: Since Diwali is one of the main festivals in India, lenders offer the best deals during this time. While availing any home loan, borrowers always want to find the best deals, and lenders are choosing this time around to attract borrowers. Hence, borrowers can find the best deals during this period.
Other advantages of the mortgage loan:
Buying a home is a huge financial decision, and borrowing for a home loan is an even bigger decision. The Indian government encourages Indian citizens to invest in a home, which is why various tax deductions are available for a home loan. Some of the benefits of getting a home loan are:
- Deduction of the interest payment on a mortgage by income tax
- Deduction of the payment of a principal amount of a mortgage
- Deduction of registration fees and stamp duty
- Additional deduction on income tax under various articles like article 80EE, article 80EEA, etc.
- Capital appreciation
Vinod Gill is a writer specializing in writing content on insurance and finance topics. He is a digital marketing consultant, blogger and co-founder of Technical overview .