Tax Benefits on Home Loan in India

A very important criterion to be kept in mind while taking a home loan is the Tax Benefit on Home Loan. In the union budget announced on 1st Feb 2017, the Finance Minister has made significant changes with respect to tax benefit on home loan.

So, here we will discuss about these changes and further tax benefits on home loan.

Some points we will discuss here—

• Tax benefit on home loan for under construction property before possession
• Tax benefit on home loan for individual applicant
• Tax benefit on home loan for co-applicant, co-borrower and joint owner
• Tax benefit on home loan for second home

 Tax benefit on home loan for under construction property before possession

Booking an apartment which is under constructed is sometimes cheaper.

If you have taken a home loan for purchasing under construction property, you can claim tax deduction on the interest paid during the construction year after construction is completed and property possession is given to you but there is no tax deduction on principal repaid during the construction period.

According to Section 24 of IT Act, you can claim deduction against the interest amount that you have paid on your housing property during the pre-construction period.

Tax benefit on home loan for individual applicant

EMI is typically divided into principal and Property Loan Emi Calculator.

Principal is allowed as deduction from your gross total income (subject to an overall cap of 1.5 lakh with other eligible investments).Interest payable on self-occupied property is subject to a maximum deduction of 2 lakh under the head ‘income from house property’.

It can be set off against other income, in the same year. This reduces your tax liability. But to claim this, it is essential that the acquisition or construction is completed within 5 years from the end of the financial year in which the loan was taken; else the deduction will be limited to 30,000.

[Source: testblog.in/regroblog/2017/02/08/tax-benefits-on-home-loan-in-india]

Refund Home Loans Low Doc and No Doc Home Loans

Both low doc and no doc home loans happen to be ideal for private contractors, self-employed, people with poor credit rating, consumers with financial obligation on their existing mortgages and debtors whose loan applications happen to be turned down by the typical mortgage lenders. These two also works if you have stable net income but are struggling to match the bank requirements.

Low doc home loans are the types of refund home loans that do not expect you to validate your income. Aside from the proof of income source, you will be expected however, to show other records. And so basically, low document mortgages remove the difficulties out of applications for the self-employed. If acquiring revenue records proves to be a hassle, then this house loan product is your best option since it gives rapid and immediate access to financial resources.

Low document mortgages also cost a tad bit more costly as opposed to conventional mortgage loans simply because individuals who purchase them are regarded as high-risk. A much larger down payment is furthermore necessary for both .low document and no document mortgages. More often than not, men and women use low doc home loans to purchase investment properties and residential properties. Low document home mortgages can also be used to refinance active properties purchased by individuals without the latest tax returns or PAYG to validate their salary with proper Home Loan Repayment Calculator.

Low Doc Loans and No Doc Loans are actually categorized into three types, particularly no ratio home mortgages, stated-income (low doc) loans and no document home mortgages.

No ratio mortgages are made specifically for individuals who may not wish to disclose their incomes. That means that there is no income to debt ratios for the lender to think about. The consumer makes up for the non-disclosure via his excellent credit in addition to abundant resources.

Stated-income loans on the other hand would be your option if your household money adjusts per week. But compared to no document mortgage loans, low doc loans require the customer to divulge his financial state and earning capacity, commonly for two years. The client might also be required to bring banking statements and tax returns.

No doc loans are offered to people who are totally unable to qualify for traditional loan products. It is also the suitable type of loan for individuals who do not wish to divulge their financial circumstances.

In the event that you feel that you will be far better off with both a low document loan and no document loan, you may possibly want to speak to a mortgage loan expert first before you actually take out a loan.

[Source: http://www.sooperarticles.com/real-estate-articles/mortgage-financing-articles/refund-home-loans-low-doc-no-doc-home-loans-354957.html?]

5 Essentials of Loan against Property You Can’t Avoid

Availing a loan against property (LAP) has become quite easy these days. The procedure can be completed online on websites. However, as an applicant for LAP, you must be aware of certain criteria to make sure the entire loan procedure happens smoothly.

Here are some aspects to checkout before applying for a loan against property with a bank or financial institute.

1.      The Property Value

Whether you intend to apply for a loan against property on residential or commercial estate, you must know the monetary worth of the property in question. Suppose you need a loan amount of rupees 40 lacs, but the estate’s current market value is only INR 35 lacs, then getting entire amount of INR 40 lacs as loan, is impossible on the concerned property.

The loan amount sanctioned cannot be more than the property’s value. But, you can get up to 70 to 90% of property’s market value as loan. If your loan requirement is higher than the property’s cost, then other financing options have to be considered in combination.

In the above case scenario, however, you may be eligible for a lower loan amount, depending on the income you obtain.

2.      Income & Repayment Ability

LAP is majorly taken when there is a requirement for large amount of money. The mortgage loan approval will depend on your monetary income, and repayment ability. Depending on the income, and EMI scheme suitable, repayment tenure will be decided, which is maximum up to 15 years. You must draw a comfortable income in order to take care of loan against property payments.

The reason why banks are serious about the applicant’s income status is because a person with regular income will be able to pay the EMIs consistently, than defaulting in its payments. So the bank does not have to worry about selling the pledged property to recover the LAP amount, which would otherwise take intensive time and efforts.

3.      Co-applicant for Mortgage Loan

If you alone cannot fulfill the income or repayment capacity essential for getting Loan for Home sanctioned, then you may be able to bring in a co-applicant. The loan providing institute will run a check on the co-applicant to confirm if he/she and you together can repay the mortgage loan amount or not.

4.      Real Estate Ownership

If you are the sole owner of the property, then there must be no problem in acquiring a loan against the same. If there are co-owners who do not agree with your decision of applying for LAP, or the property is disputable with necessary documentation out-of-place, then the mortgage loan can be rejected.

5.      Know the Fees Involved

Apart from the LAP interest rates, there could be other charges such as loan processing fee, pre-closure charges, sales tax, agent cost and more. You must acquaint with all these charges or fees that have to be paid for, when applying for a loan against property.

Keeping the above mentioned factors in mind, you can seek a. Read more to know the finer points about loan against property.

[Source: http://blog.loanbaba.com/5-essentials-of-loan-against-property-you-cant-avoid/]

Do not Overestimate Tax Benefits on Home Loan Repayment

You have some cash in hand because of the recent annual performance bonus that you received. You have not yet decided how to use that money. You have no credit card or personal loan which needs to be settled at a high priority. You only have a home loan but you are not planning to part prepay it because you will lose out on tax benefits.

This is a common refrain among home loan borrowers. They do not want to prepay their loan just because of associated tax benefits. I do not deny that home loan repayment comes with tax benefits bringing down the effective cost of loan through calculating Home Emi Calculator.

However, sometimes, these tax benefits on home loans can be overrated.

Tax Benefits of Home Loans

Deduction in total income by up to Rs 1.5 lacs for principal repayment under Section 80C of the Income Tax Act

Up to Rs 2 lacs for interest payment for a self-occupied property under Section 24 of the Income Tax Act. For a let-out or a deemed let-out property, there is no cap on tax benefit for interest payment.

You may get limited Tax Benefit for Principal Repayment

You may be re-paying more than Rs 1.5 lacs of principal in a financial year. The tax benefit is capped at Rs 1.5 lacs per financial year.

Even if you are paying less, your other Section 80C investments such as PPF, EPF, ELSS, insurance premium etc may exhaust the entire or major portion of Rs 1.5 lacs even before principal repayment comes into picture.

You get tax benefit for principal repayment only once you get possession of the house. Principal repayment done before the financial year in which you got possession of the house does not get you any tax benefit. This assumes important for tax-payers who have purchased under-construction property.

[Source: http://www.personalfinanceplan.in/opinion/do-not-overestimate-tax-benefits-on-home-loan-repayment/]

Have You Considered These Key Factors Before Availing Your Home Loan?

So you want to purchase a new house, but don't have the resources. Borrowing such a large amount of money even from your close relatives or friends is something that might put you in an awkward situation. Don't worry! There are plenty of banks, financial institutes and non-banking financial institutes which offer a variety of housing financial requirements.

However, there are of course many different factors that need to be kept in mind regarding home loans, other than the fact that a person first needs to be 'eligible' to obtain the loan in the first place. Basically monetary assistance that is offered by financial or even non-banking institutes so as to help a person in the purchase of their home is known as a home loan. While the loan that is offered cover up to 85% of the requirement (overall cost of the property), the property itself stands as a form of security until a person re-pays the entire loan amount along with the interest.

7 important factors that a person should keep in mind regarding housing loans include:

1) Eligibility: Did you know not everyone is eligible for these loans? In other words, loan amounts of high value can only be given to those people who have it within their means to re-finance the borrowed money. Lenders determine whether they can provide the loan to the person only after examining certain key factors such as his income level, financial stability, etc. It is easy to find out one's eligibility by making use of online tools such as the Housing Loan Emi Calculator' wherein a person has to enter in key information to find out his eligibility. It also plays an important role in determining the amount of EMI a person has to pay.

2) Application: Once a person is eligible, his/her application is the next step. Whether online or offline a person has to fill in an initial statement of his/her personal and financial information that is required to apply for the loan. These forms can be found online where they can be downloaded or can be physically filled in by visiting the bank branch.

3) Documents: Submitting documents is a mandatory step when availing home loans. The bank may require many different official documents such as income tax returns, copy of PAN card, last six month's bank statement, proof of identity, form 16 for the last 3 years (for salaried persons), salary certificates, proof of address, passport size photographs of the applicant, etc.

4) Loan Margin: A loan that is given to an applicant will be a percentage of the total value of the property. Depending on this amount, there will be a service tax that will be charged (as a percentage).

5) Tax Benefits: According to the Income Tax Act, people can also benefit from tax deductions on their home loans. This has been mentioned under Section 24, Section 80C & Section 80EE (inserted by Budget 2013)

6) Interest Rate: Varying from bank/financial institute the different interest rates will vary and also through certain periods. One of the key factors home loan seekers look at, the interest rate plays a pivotal role in determining whether one will avail a particular loan or not.

7) Is pre-payment option available? Is there a penalty involved? : Very often, it is wise to know if you can make any pre-payment (early repayment) so as to take advantage of lower interest rates. Based on the lender, it is also important to find out if any penalties are charged in case you transfer your loan or even close your account before maturity.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/have-you-considered-these-key-factors-before-availing-your-home-loan-1297157.html?]

Benefits of Home Loans

You can get a low interest rate on a home loan for that simple fact. Loans given against collateral will get you a lower interest rate. Banks have the assurance of collecting on their loan if you don't pay. Such loans are considered to be high-risk and many leading institutions have quit writing them completely. Loans provided for the home itself provide money for the construction, including the costs of all building materials required. A person who wants to avoid the risks of increase interest rates and have a fixed income regularly is the right candidate for such fixed rate home loan.

To take secured home loan at low cost, apply online. You are flooded with loan offers from as many lenders with each one of them having own terms and conditions. You should compare loan packages to pick up the one having interest rate suitable to your budget. If you are a home owner but want to borrow a small amount and do not like to risk home for such a loan, then you can opt for unsecured home loans.

A construction to permanent loan is a two-in-one loan ideal for most people since it would only require you to submit documents and pay closing costs once. Home loan lenders look at your credit history to gauge your ability to pay. Your credit score speaks volumes about the kind of debtor you are. These loans are very flexible and come with a variety of options that can be customized to fit your needs. Secured home improvement loans are provided on taking home or any valuable property of the borrower as collateral and these loans are ideal for raising large amount at low rate of interest. To avail secured home loans, you need to place collateral.

This collateral could be in the form of your home, which will act as a security for the loaned amount. When offering security you'll be able to obtain better House Loan terms on your bad credit loans. You can easily get lower interest rates, higher loan amounts, lower monthly payments and more flexible repayment programs. To promote the real estate sector the housing loan industry has also been growing very strongly in India. It is one of the important factors which have caused such an amazing growth of real estate sector. Online lenders are risky. Your personal information is not safe in their hands. This is what most of us are made to believe.

Most homeowner loans are secured ones. The equity of the house pledged by the borrower is valuated and in most cases, 90% of the home equity is given as the loan amount. Secured home loans are very popular with bad credit borrower also. The risk is minimum for the lenders, since it is secured against the property of the borrower who has bad credit. Online secured home loan is the fastest and easiest way to search your lender. Just you need to fill an application form that hardly takes minutes and in seconds you with your lender.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/benefits-home-loans-341976.html?]

Uncover 3 Things You Didn't Know About NRI Loans

Loans are an ideal financial aid, especially when there is a need for a large amount of funds. Various individuals apply for a loan when the occasion calls for it. There is a certain process along with the submission of certain documents to avail of this aid. The NRI loan is no different. This loan is available to NRIs' and follows the similar process. However, this loan is not like rest of them. It has a unique requirements and challenges. Here are three most important details you must know about NRI loans.

A NRI Loan Is A Different Package:

With a NRI loan, especially when it comes to gathering finances for a home, NRI citizens may find that this is more complex than just taking up a local home loan. Both these financial aid will require different types of documents, will have different tenures and different modes of repayments. Repayments can be done through the NRO or the NRE account. The interest rates are also higher compared to the local rates through Home Emi Calculator. To put it into perspective, NRI home loan rates are normally 0.25 to 0.50% higher. But, NRI and local residents need similar amounts as a down payment for the loan.

Owning A Home Is More Challenging:

A NRI home loan will have fixed purposes which cannot be used for any other use. This will include self-construction of property on a plot of land, financing the purchase of a plot of land that is allotted by a society or a development authority, renovation or improvement of an existing property in India or a purchase of a house that is either under construction, sale or on a resale.

This form of credit can be used for a secondary home too. It can be used for income tax rebate too. However, NRI home loan will require a long list of documents. In most cases, NRIs cannot make this acquisition without a local support. You will also need to submit your income details from the foreign country, which complicates it furthermore.

Tax Benefits Are Tougher But Available:

NRI citizens will have to pay tax in the current nation where they are working and earning. But, if there is substantial income from Indian resources, they will need to pay tax to the Indian government too. NRI's, though, can claim any tax benefits on their housing loan in India as well. It should be noted that gaining eligibility for a NRI home loan is not easy. But, it is the best source of tax rebate available for NRI's.

Now you know the different facts that go into making a NRI loan the product it is. These loans have several other benefits too that should be researched about. The Indian government has currently ensured that, if any Indian origin individual wishes to return home in the near future, he or she is more than welcome to do so. Thus, it is wise to invest in that option as and when you are able.

[Source: http://www.sooperarticles.com/finance-articles/uncover-3-things-you-didnt-know-about-nri-loans-1379863.html?]