Jul 9, 2019
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Home loan guide for the first time buyers

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A home loan is an amount that is provided to a person helping him/her to buy a home. It is almost impossible for someone to buy a home without applying for a home loan. Plus, the given market condition doesn’t provide the required situation for buying a home without a home loan.

It is very much necessary to take a home loan because you cannot spend all the hard earned money at once in order to buy your desired home. You will still fall short of funds even you try to save your earnings from the very start of your career. This step is practically impossible as you would need money for your basic expenses, future planning, and for the uncertain emergencies to come.

So in order to suffice your needs as well as buy your desired home, you would need to take a home loan. A home loan will help to reduce the tax liabilities along with creating an asset. Still, getting on with a home loan is not as easy as it seems. If not handled correctly, it can create issues for you in the future. You must research the market thoroughly as there are many options to choose from. Looking for the perfect home can narrow your choices too much, and you might pass over solid contenders in the hopes that something much better will come along.

Here are some points you should need to consider while applying for a home loan:

Eligibility for Government Housing Schemes: You must know where you fall among the categories entitled by the government under PMAY (Pradhan Mantri Awas Yojna). You must be among one of the following classifications in order to be eligible under PMAY:

  • Economically Weaker Section: Annual income less than 3 lakh INR
  • Lower Income Group: Annual income 4-6 lakh INR
  • Middle Income Group: Annual income 6-12 lakh INR up to 18 lakh INR

Know your repayment capacity: Decide on a home loan amount that you can repay without affecting your basic expenses. You must know your repayment capacity even though the bank may offer you more amount as a home loan. Ensure that your Equated Monthly Installment or EMIs shouldn’t be more than 40% of your take away income. You will still need money for your other financial goals in life.

Property Value: Financial evaluation should include the value of the property. You must know the sales price of your desired property in order to apply for the home loan. Usually, lenders provide up to 80-90% of the property price as a home loan, of course, depending on the price. For a home worth up to 30 lakhs INR, you are eligible for up to 90% of the price. As the price of the property increases the home loan percentage decreases. The maximum home loan that you can get is up to 75% of the property price. The important part is that you must pay the remaining as the down payment from your own pocket. Hence, you must plan accordingly.

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