Buying a new home is a dream of every couple. But to realize the dream, you need to bear a huge cost and this can be quite difficult to do. So, a good option is to take a Home Loan from a business personnel. The government is currently encouraging first-time home buyers and you can benefit from some of their schemes.
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But you need to first find out your Home Loan eligibility. Then, you must understand which type of Home Loan will be best for you. Here is a list of the most popular Home Loans in the Indian market today.
Home Loans in India against property mortgage are the most traditional type of loan.
- Banks and lenders love this kind of loan and borrowers with no other collateral security also find it easy to avail this option.
- New couples mortgage the property to secure the loan, continue to stay in it and own it when the loan is over.
- These loans may have fixed or floating interest rates. You can calculate the interest with the help of a Home Loan EMI calculator.
- The rules and guidelines for such loans are broadly regulated by the government. However, financial institutions may have their own terms and conditions.
- They may also have different Home Loan interest rates. Do some research on the interest rates charged by different financial and lending institutions and select the best housing loan for your budget.
Subsidy For First Time Home Buyers
The Indian government has recently started a new scheme for first-time home buyers.
- The Prime Minister Awas Yojana has set a target of building 2 crore new homes by 2022.
- The scheme provides interest rate subsidy on Home Loan. This program is highly beneficial for first-time home buyers. There are two main subcategories. They are:
If your family earns 6 lakhs or below per year, then you are eligible for an interest rate subsidy of 6.5%. However, the loan amount should not exceed Rs. 6 lakhs. So if you earn 6 lakhs or below per annum and want to secure a loan of say 10 lakhs, you get the subsidy only on 6 lakhs. For the rest of the loan, i.e 4 lakhs, you need to pay market-linked Home Loan interest rates.
This is perhaps the first time that the government has arranged a subsidy for people with higher income too.
- Two new categories have been created. This includes one income slab of 12 lakh per annum and another income slab of 18 lakh per annum.
- If you are within this income category, you can secure your eligibility for Home Loan at a government subsidized rate.
Relaxed Condition To Have Interest Subsidy
The government has relaxed the conditions for securing interest subsidy to avail affordable Home Loans with low interest rates. Now, your Home Loan eligibility with subsidized rate extends up to the limit of 20 years. This was previously 15 years. So the government is certainly encouraging new home buyers to have a new home.
Home Loan Interest Rates
If your annual income is within 12 lakh then you are eligible for an interest subvention of 4%.
- However, in this case, the principal amount to be considered for Home Loan interest rates subsidy is Rs.9 lakhs.
- So even if you take a loan of say 20 lakhs or more, you get the interest rate subsidy on Rs. 9 lakhs only. For the rest of the loan amount, i.e. Rs.11 lakhs you need to pay market-linked rates.
- If your annual income is above 12 lakh, but within 18 lakh then you are eligible for interest rate subvention to the tune of 3%. However, you also qualify for a bigger pie of the loan. You can get the 3% subsidy on a principal component of Rs.12 lakh.
Special Rates For Women Buyers
You have secured the interest rate subsidy on a part of the loan only. For the rest amount, you have to pay market-linked interest.
- However, you can lower the rate further by taking the loan in your wife’s name. Lending institutions generally charge lower interest for women borrowers.
- This can be to the tune of 0.05 to 0.1%. But, such small percentages matter when it involves lakhs of rupees.
By now, it must be obvious that there is not the better time to take a Home Loan than now. Thanks to the government subsidy, you can avail a Home Loan for much less now than before. Take a housing loan today to make your housing dreams come true!