Home Loans in India
Though getting a home loan or for that instance getting any loan has become much easier in India. However Home Loans to the consumers had a good run until the property rates reached sky-high, much of this is due to the sharp increase in the construction material supported by the ever increasing land rates. The situation is made worse with the increase in interest rates by 2% - 3 %.
The property prices are increasing 3-4 times against a minimal increase in income levels, making the property ‘just a dream’ for the mammoth mid-class in the country. This has resulted in movement of people to suburbs, and that’s not all.
Getting a pet amount for the loan at the bestowed ‘rate of interest’ itself is difficult, further, if for some reason the loan is cancelled, it has a hefty non-refundable processing fee attached to it, so make up your mind before you apply for loan.
Generally home loans are of elongated tenure and many a times the financing institution will adjust the EMI or Tenure with increase or decrease in interest rates. At this case in point one has the question - whether to pay higher EMIs or increase the Tenure. If you have sufficient amount of money with you then you should look to settle the loan as quickly as possible because interest rates are less likely to come down and you may find yourself paying more in future with longer tenures.
On the other hand when you take a home loan, you get a deduction under section 80C/24, this is against the principal amount of the home loan but however this deduction is forgone if the loan amount is taken from a private source (Friends, Family or private firm). Also, if you plan to sell your house within the loan period then the total deduction constitutes to your income for the year(s) and becomes taxable.