To own home is a dream to many and in order to fulfill this wish, most of us opt for a home loan from banks. Before every documentation and application, we study each and every detail related to the loan. It may be processing fees, interest rates, or EMI or prepayment clause, etc. Still, most of the loan borrowers didn’t know about many important points about their home loan. So, if you are a loan borrower or thinking to apply for home loan read this blog and get to know about the 7 key things:
Eligibility for Joint Loan
Most of the loan borrowers think that if they will apply for a joint home loan, the banks will approve a bigger amount. But then they are wrong, leaving apart married couples and parents/children; unmarried couples, siblings or others are not eligible for a joint home loan.
Benefits to Women borrowers
In most of the cases, the male counterpart applies for a loan. However, most of us didn’t know that women borrowers in our country enjoy more benefits in term of interest rates as compared to males. So, if you make your wife primary co-applicant, then you have the chances to get a loan at much lower interest rates.
All of us know that a home loan helps in gaining tax benefits during Income tax filing. But again there is a turn in it! A borrower can avail tax benefits not in one but under two sections of the Income tax act. Yes, it’s true. A loan borrower can claim tax benefits on both principal amount as well as interest rate of the loan. For example, one can avail deduction on principal amount (up to 1.5 lakh) and interest rate (up to 20 lakh) under section 80 (c) and 24 (b) of the IT Act. The same applied to joint loan borrowers too; just the component of both gets double.
Issue of Co-Applicant
Suppose you and your wife taking home jointly and both are adding funds on their side. You have cash and not interested to take loan, while your wife wants her part to be funded via loan. In this case, banks ask you to become the co-borrower? Surprised!!!
Yes, as the home will be registered on both the name, so it becomes mandatory for the bank to make you the co-applicant.
Interest and Principal Amount
It is not known to many that in the recent years of your loan repayment, you have to pay the interest rate first and the principal amount later. Due to this, the rate of interest component becomes much bigger than the principal amount.
Rate of Interest is not ‘Fixed’
This happens in most of the cases. Many loan borrowers opt for ‘Fixed’ rate of interest against ‘Floating’ so that they don’t have to take load of EMI fluctuation. But that’s not so, in case of ‘Fixed’ rate of interest too, the percentage changes after the certain number of years.
Last but not least, none of the banks gives approval for the complete loan amount. So, it’s better to have ample finances before applying for a loan so that you don’t have to face any crises during loan finance.