If you are thinking of buying your second home, here is some information to drive you in the right direction in terms of managing two home loans and increasing your tax benefits.

Tax benefits with two home loans

The tax treatment for home loans is determined based on which of your properties is self-occupied. The other property is automatically considered rented out, whether or not it has actually been rented. For the property that you have deemed self-occupied, you are liable for tax relief both on the interest and principal amount you’re paying towards your home loan. You can claim a tax deduction of up to R1.5 lakh under Section 80C on principal repayment and R2 lakh under Section 24(B) for interest repayments.

For a second home loan, you will get tax deductions only on the interest repayment and not on the principal repayments. There’s no ceiling to the deductions towards interest payments on the second home loan. Therefore you can claim deductions on the actual interest paid. Also, tax benefits for the second home loan are limited for an under-construction property. You can avail a deduction on 20% of the total interest paid during the pre-construction phase for a five-year period.

Eligibility and managing debt

Let’s assume that you’ll take another home loan to fund the purchase of your second property. This could mean that you are servicing two or more loans simultaneously, and this could strain your finances. Let’s take a look at how best you can manage this situation.

Settle your existing debts: It’s rarely easy paying multiple equated monthly installments (EMIs). If you can close existing debts—be it your loans for car or home, a personal loan, or an outstanding credit card balance—it would strengthen your financial position, and also increase your eligibility for a new loan.

Use the 40% yardstick: You should avoid over-leveraging. Ideally, your total loan EMI payments should not cross 30-40% of your monthly salary. If they do, it may be advisable to not take further credit. Lenders also will not be inclined to provide you further credit.

Calculation of second loan: Banks will check your first home loan EMI payments and decide on the EMI for your second home loan. They will consider your monthly salary minus your first EMI and other fixed loan obligations as your repayment capacity irrespective of your monthly earnings. If you are paying a high home loan EMI for your current loan, your repayment capacity would get reduced proportionally, impacting the EMI of your second loan.

Reason for your investment: Have clear reasons for buying a second home. If you are looking for a second home as an investment, compare the returns on such an investment with returns from other financial instruments. If the idea is to earn a rental income, make sure to check your tax liability.

[Source: http://www.financialexpress.com/industry/banking-finance/heres-how-to-maximise-tax-benefits-with-2-home-loans/398414/]

Choose the Best Home Loan Deal

Long term bank loans are available to achieve long term financial goals. One of the most common examples of long term loans is home loan. Home loans are available in different variations. Numerous offers are available from several lenders. You need to choose the features offered by lenders very carefully that best fits your needs.

Know Your Need

Get the full insights about repayments and attributes that suit your circumstances well. Introspect yourself and get the instincts of your requirements.

Whole Package Consideration

If a loan package is available at lower interest rate then there is probability that fee structure will be elevated. If more features are facilitated then you will be likely to pay more fees and higher interest rate.

Loan Structure

Know your requirements and the essential features that you desire and cannot compromise, then get the best loan deal. Individual circumstances must be accommodated by the loan deal that you are going to pick. If someone is purchasing his first home then the loan should be easily manageable at least for the very first year. Availing a home loan is a big deal for your family so take out time to plan it vigilantly.

The Affordability Factor

Usually financing institutes fund 80% of the property value. However there are other lenders too that will fund you 100% but in that case you will be liable to pay higher rate of interest. Calculations will help you to know the affordability because a home loan changes the financial conditions of a family drastically. Repayment Options

Do the proper research and stay informed about the House Loan products. The elementary part of a loan is its repayment. You are advised to check the ability to repay additionally without any extra costs and the ability to pay through debit card, ATM's internet or phone banking. Another advice is to confirm the re-fixing of interest rate and loan split without any cost.

Right Lender

The best way to choose the lender is through direct consultation to the lending institute. Ask as many questions as you can so until you get the satisfactory response. Ask then to show the loan programs and explain the process. You will get to know about their services and if there would be any issues post settlement then there would be customer service consultants to resolve the issues.

[Source: http://www.sooperarticles.com/real-estate-articles/property-investment-articles/choose-best-home-loan-deal-1403650.html?]

Ten Tips For Finding The Best Home Loans For First Home Buyers

First home buyers face a variety of daunting tasks when they're ready to invest in a house, including finding the right financing. Working with the right loan provider can make the process easier and help you find the right fit. When you're comparing your purchase options, keep the following tips in mind:

1. Find an Established Lender Specializing In Home Loans

While you can work with any kind of bank, lending institution or credit union, it's best to gravitate toward those who have plenty of experience with the unique requirements of housing loans. They will be more familiar with the complexities of the application process and what paperwork they'll need in order to process your application quickly.

2. Work with A Lender Who Helps First Time Buyers

Not all lenders are familiar with the unique needs of first home buyers. There are many considerations that are unique to individuals who haven't owned a house before and your lender should be familiar with these circumstances and flexible enough to accommodate your specific needs.

3. Work with A Lender Experienced With Both Buying and Building

You may start your search certain that you will discover the ideal house in the ideal location, but switch to building a new one a few months down the road. Or you may decide that building is too stressful and you'd prefer to purchase a previously constructed house. Working with a loan company who is experienced with both options can save you time and money. If you have to switch lenders mid-stream, you may need to pay some fees twice and go through a second approval process that can add weeks or months to your purchasing timeline.

4. Be Sure They Are Familiar with Government Programs

Government assistance programs for first time buyers can save you a considerable amount of money. In addition to the First Home Owners Grant (FHOG), there are programs that vary from state to state. Ask lenders about their experience with government programs and regulations to be sure you don't miss out on valuable opportunities.

5. Work with A Lender Who Offers Loans Through A Variety Of Banks

If you apply for financing through a company that has access to several established lending institutions, you'll be able to compare interest rates and get a better deal. Also ask about unusual options such as low deposit, no deposit and no savings home loans, which may vary from bank to bank.

7. Understand the Pros and Cons of Various Loans

There is a vast difference between fixed, variable, split and interest-only Home Loan India. Educate yourself before choosing one. For some people, a fixed monthly payment is easier to budget, while others may prefer the possibility of lower payments that a variable rate loan offers.

8. Don't Overextend Yourself

While you may be thrilled when you're offered extravagant home loans, be wary. If a lender presses you to borrow more than you're comfortable with, it's best to find another provider.

9. Start Your Search Early

Rushing into applications for house financing is rarely successful. Complications with paperwork, last minute glitches and rushing through the process often leads to disappointment. The time to start comparing loans is before the builders lay the foundation or before you make an offer.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/ten-tips-finding-best-home-loans-first-home-buyers-1104602.html?]

Home Loan Emi Calculator

How to Find a Low Home Loan Rate

Buying a new house can be an exciting prospect... unfortunately; it also tends to be very expensive. If you're like most people then you're going to have to borrow the money to purchase your new home, and you're going to want to find the loan that has the lowest home loan rate that you can get.

Luckily, finding your lowest home loan rate doesn't have to be difficult; you simply need to have patience and be willing to shop around and compare the various rate offers that you receive. Here are a few tips to assist you in your search, as well as a few things that you should keep in mind to save yourself as much money as you can with your home loan rate.

Interest Rates Fluctuate

It has been said that nothing is certain except for death and taxes... the fluctuation of interest rates should also be added to that list. Some rates are intentionally raised or lowered at a local, national, or international level in an effort to combat inflation or to stimulate the economy. Other rates manage to creep up or down on their own, adjusting to the supply and demand of the market.

It's important to know whether rates are up or down if you want to get the best home loan rate that you can; this information can usually be found out rather easily from the financial section of newspapers or tabloids, or can be found by utilizing your preferred internet search engine online.

Fixed and Variable Rates

Just because the interest rates across the nation and around the world are constantly in a state of flux doesn't mean that your home loan rate will be constantly shifting as well. Depending upon the specifics of your loan agreement, you might end up with either a fixed interest rate for the term of your loan or a variable interest rate for the loan term.

Fixed interest rates are those loan rates that are locked in once the loan is approved and all of the paperwork has been signed and processed. Regardless of how interest rates rise or fall, individuals who have fixed interest rates on their loans pay the same interest month after month.

Variable interest rates, on the other hand, modify themselves as interest rates rise and fall. This allows individuals to roll with the changes in the financial world, though a sudden increase in rates can have people who have variable interest rate loans paying a lot more for their loans. Sudden decreases have the opposite effect.

Remember Additional Costs

Before you commit to any home loan rate go for Property Loan Emi Calculator, it's important that you keep in mind that there may be additional fees and charges associated with your loan. Take the time to make sure you know exactly what portion of the cost you're borrowing and what portion you're having to pay out-of-pocket... you don't want to end up with additional financial problems because you weren't expecting to have to pay additional fees.

Searching for a Lender

When searching for a lender to offer you a good home loan rate, make sure that you take the time to explore a variety of different options both in your local area and online. A number of different types of lenders can be found in different areas, and many of these lenders are able to offer fairly good loans... you should always compare the offers that you receive to each other, though, just to make sure that you end up with the best loan that you can get.

[Source: http://ezinearticles.com/?How-to-Find-a-Low-Home-Loan-Rate&id=1138887]