How to Get a Home Loan & Smart Tips to Pay It Off Faster
Home loans are a boon; they help to fulfil the long-cherished dream of owning a home. However, they create a burden on the borrower. Repaying the loan faster helps to bring stability and provides a feeling of fulfilment. It also reduces your expenditure in the long run. Suppose you are worried about how it is possible because you have a limited income. Well, even despite having a tight budget, with a strategy, you can repay your home loan fast. Read this blog “How to Get a Home Loan” to learn about the strategy and plan your future wisely.
Let’s start!
How to Get a Home Loan: Do an In-depth Market Research
The market is full of options. In-depth market research helps you compare quotes and choose a lender with a lower interest rate. It makes the EMIs affordable and helps you to pay them comfortably.
Make a High Budget for a Down Payment
The down payment amount impacts your overall EMI amount and interest rate. Try to make a down payment that exceeds 20% to 30% of the total price. We know it is high, nevertheless, the higher down payment lowers the principal. It lowers the interest rate and reduces the burden on you.
Extend Your Budget For Equated Monthly Installments (EMIs)
If your budget allows, try to opt for higher EMIs. Although it is not easy, it is effective significantly. Higher EMIs reduce the principal faster, thereby decreasing the interest burden over the loan’s life.
How to calculate home loan interest: Say No To Missing Payments
When you are facing a harsh time, missing the EMIs is common. Undoubtedly, it is fatal. Missing payments leads to 2% penal interest with tax. Additionally, this leads to a lower CIBIL score and a faulty credit report.
A lower CIBIL score shows your poor financial management and missed payments. It creates issues when you try to get a loan in the future. Take note that almost all the lenders in India check the CIBIL score before sanctioning a loan to ensure a safe repayment.
Utilise the Windfall Income
Windfall income means sudden payments, such as bonuses, incentives, gifts, inheritance or lottery. These payments help you to reduce the principal amount, and interest rate and make the tithing easier for you.
However, before adopting this approach, make sure you don’t have higher interest liabilities like credit card payments. Additionally, if you have options for a good investment with higher returns, go for it. Later, you will be able to use the interest to pay the EMIs.
Continue The Market Research
Continuous market research is one of the easiest ways of repaying your home loan. If you find a lender with a lower interest rate, don’t hesitate to transfer your loan. For that, you need to fill up a form for the new lender, collect all the data (for example, property papers, land deeds, etc), and a consent letter from your old lender, foreclose the old account, and opt for the new lender. It might sound tricky, but it’s not. You can hire a lawyer to do this task for you.
Choose a Shorter Tenor Loan
Most people tend to opt for home loans that have a long time to repay. Well, it is not a great idea. Instead, go for home loans that have a shorter tenor. It helps you to repay the loan faster. It might be hectic for a time, but it is going to be beneficial in the long run.
Utilise the Tax Benefits
There are plenty of tax exemptions for the borrowers, you must know them to utilise them. For example, according to the Income Tax Act 1961, section 80c permits deductions up to Rs. 1.5 Lakhs for the principal repaid. Section 24(b) allows deductions up to Rs. 2 Lakhs for the interest component.
Under Section 80 EE, first-time homeowners can avail of tax benefits of up to Rs. 50,000 on interest payments annually throughout the loan tenor if the loan value is under Rs. 35 Lakh for a property worth less than Rs. 50 Lakh.
By availing of these tax deductions, you can reduce your tax liability and redirect the savings towards loan pre-payments, potentially shortening the repayment tenure.
Pro Tip: How to Get a Home Loan
The best way of repaying the loan quickly is to pay the principal amount. It lowers the interest rate and helps to end the cycle faster. For that, you can use an alternative income source. For example, if you are buying a new apartment, put the old one on rent to generate a significant amount per month. It contributes to managing finances better.
How to Get a Home Loan
As the strategy is clear, it is time to pursue the loan. If you are a novice, you might feel overwhelmed about it. Don’t worry, here are the steps you must follow:
Calculate Your Asset and Do the Market Research
To get the loan, start your asset evaluation. In this, you must assess how much EMI you can afford. Once clear, do in-depth market research about the interest rates and tenors.
Gather Documents and Apply for the Loan
We suggest gathering all the documents before you apply for a home loan. You will require details like identity proof, address proof, bank account statements, salary slips (the more recent, the better), and documents of the property that you want to give as collateral. Once you have all, proceed with a home loan. You can do it from the bank website. Depending on the bank, you might require details like personal data, educational information, your income, current means of financing, and more.
You are done with the process, now the bank will verify every detail and grant your loan (if you fit their criteria).
Pro Tip: How to Get a Home Loan
To get a home loan easily, always choose properties from a reputed builder. Renowned builders follow all the legalities, maintain papers, and contribute to faster home loan disbursement. Remember, the lender will inspect minute details before sanctioning the loan.
Wrapping Up: How to Get a Home Loan
Use these strategies to pay your home loan faster and grab the ownership of your dream home. If you are looking for a reputed builder and a luxurious property at an affordable price, connect with us.
We have several projects in the Rajarhat, Newtown area. These properties have updated amenities and all the facilities for a comfortable life.
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