Many consider a housing loan to be a burden. The borrower is required to pay an EMI each month till the tenure of the loan ends. The financial strain one has to suffer can be quite tedious for many. However, this is not entirely true as there are many benefits to a housing loan for borrowers. One of the biggest benefits is the financial security it provides.

Tax benefits

A home loan provides the individual with a number of tax benefits that they can avail. The tax deductions greatly ease the financial burden one suffers from and makes the entire housing loan repayment process easier. The interest paid on the housing loan is one of the key elements due to which one can apply for tax returns.

Reasonable savings

Purchasing a house is an extremely expensive business. With the cost of real estate constantly soaring, it is virtually impossible for an individual to purchase a house of their dreams with their own money. Even if one attempts to do so, it will cause them to use up most of their savings. A housing loan provides the finance required by and individual to afford a house without having to empty their savings and investments.

Money for emergencies

It is crucial for any individual to save up money for emergencies, be it medical or otherwise. However, this proves to be extremely difficult if one does not apply for a housing loan with any financial institution. Purchasing a house entirely with one’s own money leaves the individual financially vulnerable. In the case of any serious emergencies, the individual may not have the finances required to afford any sort of treatment or surgery.

Affording day to day expenses

One of the benefits of a housing loan is that it allows one to have enough income for their daily and monthly expenses. A financial institution will only approve a loan which they know the individual can afford it. This means that the EMIs one is required to pay each month will not exceed more than 60 percent of the borrower’s monthly salary. In such a way not only is the borrower able to purchase the house of their dreams, but financially they are secure and can pay off the loan in ease.

A housing loan plays a crucial role in not only helping one afford the house of their dreams but also keeping their savings intact. These home loans have been designed to not just benefit the lenders but also to benefit the borrowers. Hence, when planning to purchase a house, one must always apply for housing loan .

Being the proud owner of a house is a dream everyone wants to fulfil at some point in their life. Today, a number of banks and financial institutions offer individuals a chance to make this dream come true with the help of the best home loans in India.

While availing a home loan is quite easy because of the competitive market, one has to be extremely careful when considering a housing loan plan. Many assume that availing the cheapest rate of interest is the be all and end all of a successful home loan sanction. But this is not true.

Yes, a low rate of interest does help make it easier to pay back the principal and interest amount, but a number of other factors also play and important role in determining the total interest amount that you finally pay. These factors should be considered along with the interest rate to make the most out of it.

Tenure
Lower interest rate and a shorter tenure ideally works very well for those seeking to avoid paying a high interest. In case of a longer housing loan term, one generally ends up paying more interest even if it is considerably low. Thus, tenure should definitely be considered along with interest.
Over-head charges and fees

Along with the principal and interest amount, there are certain overhead charges that have to be cleared too. This include- charges for loan processing, loan closure fee, loan transfer fee, early repayment fee, late repayment fees etc. While some banks offer lower rates, they make up for it by charging high fees. Thus, one should make sure that the overhead charges do not burn too deep a hole in the pocket.

Opting for a low interest rate should not be the only goal when looking at home loans. The credibility of the bank or the financial institution that you are considering matters as well. If one has a good relationship with a reputable bank that is offering an interest rate that is slightly high, it is always better to maintain the relationship and opt for a loan from the bank, rather than choosing a new or less reputable bank offering a lower interest rate.

All in all, when considering a home loan it is best that one takes advice from a professional and keeps in mind the above mentioned factors together with the rate of interest of the loan.

If you have any financial requirement, a loan will be the ideal option to satisfy it. In most cases, the personal loan proves to be the most appropriate choice, as it offers a financial flexibility as compared to other loan options. Not only can you use the funds from the loan for miscellaneous requirements, but you also have the financial flexibility to opt for a loan amount that will satisfy your requirement in a stress free manner.

However, like any other loan, you also need to also consider the repayment strategy. In addition to paying off the borrowed funds, you will also need to pay additional funds, such as the processing fee and the interest rate. Keeping all these factors in mind, you will need to ensure that you have sufficient funds to repay back the funds, without incurring additional debts. This is where the EMI’s come into place. With the right EMI amount, you can pay off the funds you need to, in a convenient manner, and yet enjoy the remainder of your income for other financial purposes.

By using the personal loan EMI calculator, you can calculate the ideal EMI amount that will help reduce any financial risks. Here is how it can benefit you:

You opt for interest rates that are flexible: One of the main concerns about the personal loan, is the interest rate. Since the personal loan is an unsecured loan, the interest rates tend to be high. This would mean high EMI’s and shorter tenures. However, you can always use the personal loan EMI calculator to calculate the ideal EMI’s that will not only suit your needs, but also ensure that you have sufficient funds remaining for other financial requirements.

You can make your budget less stressing during the repayment tenure: Paying off a loan, is as good as paying off a debt. However, you don’t have to make this debt into burden while compromising on your monthly expenditures. You only need to plan your budget in accordance with the tenure of the loan. This can be easily done with the EMI calculator for personal loan. While you can calculate the ideal amount with this calculator, it will also allow you to get an idea of how much of a tenure it will take to repay back the borrowed funds, along with additional expenditures. In this way, you can make your budget less stressful during the repayment tenure.

Protect your credit score in the long run: While the financial risks are high for any loan, including the personal loan, the first factor that will get affected is your credit score. Your credit score is one aspect that will affect further financial applications, especially if you will be applying for loans in the future. Why ensuring a fixed repayment budget, along with flexible loan rates, you can ensure that your credit score remains unaffected during the repayment tenure. At the same time, appropriate repayment in a timely fashion will help boost your score. Hence, using aEMI calculator for personal loanwill go a long way to protect your credit score and help improve it.

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Mortgaging your assets, especially a one that is much appreciated is a great way to meet your financial requirements. You receive the funds without actually selling off your assets and also you pay an interest rate that is much lower than an unsecured loan. One of the most popular asset-backed loan category is a loan against property or a LAP. In a loan against property, your residential property, commercial property or even a plot of land can be treated as a mortgage by the lender. Like personal loans, the biggest advantage of a LAP is that there is no restriction on the end use of the loan proceeds.

Besides the equated monthly instalment (EMI) mode, the loan against property is also available in the form of an overdraft (OD) facility. This feature mostly benefits the self-employed as the businesses can draw funds according to their fluctuating capital requirements and the interest is charged on the funds that are utilised. However, despite the numerous advantages, these loans may not be the choice for everyone. Here below are a few points to focus on before opting for a loan against property.

Interest rate: A low rate of interest is possibly the most important selling point of a loan against property. In most cases, the interest rate ranges anywhere between 10 to 14%. However, if you are looking forward to a home renovation, financing your home purchase or even your child’s education, a home loan or an education loan may work out to be a better and cheaper option. You may opt for a loan against property only if you are unable to avail a purpose-specific loan such as a home loan or an education loan.

Loan Tenure: A tenure of a loan against property can go up to as high as 15 years, giving it an edge over other short-tenured loans such as a personal loan or a car loan. A longer loan tenure may translate into a lower EMI, which then increases your affordability of the EMI. For example, if you assume that your monthly income is Rs. 70,000 and you are availing a loan of Rs. 25 lakh at 12.5% per annum for a five-year tenure, your EMI will stand at Rs. 56,245. However, if you increase the tenure to 15 years, your EMI will reduce to Rs. 30,813. But also, you must keep in mind that a longer tenure will result in a higher interest rate payment.

Longer Processing Time: As your loan against property will be sanctioned by your property, and your loan against property eligibility, the housing finance company or your lender will require time to verify all the property related documents and also carry out a technical appraisal of the property before they disburse your loan amount. Besides these, the housing finance company or the lender will also ask for your income proof to judge your capacity for the loan repayment. All of these analyses may require up to approximately 30 days. Thus, opting for a LAP is recommended only if your financial requirement is not urgent.

Besides these, there are numerous more points to focus on before opting for a loan against property. However, these are the ones that are of utmost importance.

Housing loans require a different sort of financial set up than other kinds of loans, for they are essentially long term and it is essential that you sustain your finances during the entire payment period. Now they are two kinds of housing loan interest rates that you can opt for- fixed interest rate and floating interest rate. Choosing between the two has preoccupied minds and been the cause for many an anxiety attacks for potential customers of housing loans . The choice depends on your repayment preference and your current financial status.

The key aspect of a floating interest rate is that it fluctuates with the market dynamics and where its interest rate is linked with the base rate and a floating component. This brings in a factor of uncertainty since the monthly EMI will fluctuate with each instalment of the loan. If you are okay with this constant decrease and increase of the interest rates, then a floating housing loan interest rate is preferable. This is because its rates are usually lower than a fixed interest rate and is ideal when a long-term loan is more preferable than say, five-year long loan tenure.

If what you have opted for is a floating interest rate, there are a few things to note in this type of housing loan interest rate:

* Obtain complete information: Find out the lowest and highest extent to which the interest rate can fall according to your bank’s chosen market index.

* Regular updates: Be sure to keep checking your loan account to stay updated about the market trends, especially when interest rates go the downward way. Make sure that it reflects in your loan interest rate.

* Financial strength: You should be comfortable with the fluctuating EMI rates. The EMI should never be more than 35% of your salary. Calculate the probable maximum and minimum EMI’s that you may have to pay up during the tenure. It should never exceed the comfortable zone of your finances.

* Control your expenditures: If there is a slight chance of your finances being a little tight and if you’re still willing to take the risk because of the lower interest rate, then tighten your expenditures and monitor your monthly spending. Try to not reach such a stage though.

* Chance of a lump sum or increased salary: Floating interest loans are very advantageous if you plan to pay it off in five-seven years. This means that your interest outflow is much lower and so is the impact of the market fluctuations. So if there is a chance of you receiving a lump sum in the near future, all is good and you’re well set to pay off your loan comfortably.