Earlier, most Indians bought a home once they approached retirement. However, times have changed. Today, you need not wait for so long to buy your dream home. HDFC Home Loans have made it possible for you to own your dream abode much before you retire.
As a result, now most first-time Home Loan applicants in India are 35-38 years old. Other factors that have brought about this trend are the presence of many high-paying jobs in India. As both husband and wife work, there is more disposable income available in middle-class households.
With Home Loans, you can buy your home and invest enough to fulfil other financial goals too. If you are thinking of buying your home, here’s a handy guide to Home Loans for first-time home buyers:
How do HDFC Home Loans work?
Your Home Loan application gets examined using the lender’s eligibility criteria.
If you meet their criteria, the lender informs you of the tenure, Home Loan’s interest rate and EMIs. The house you buy serves as “collateral."
When you finish paying off your HDFC Home Loan principal and interest amount, the home ownership gets transferred to you.
Calculate your approximate Home Loan EMIs with a Home Loan EMI Calculator.
HDFC Home Loan eligibility criteria
The Home Loan eligibility criteria are similar for most banks and NBFCs.
- You should be an Indian citizen aged between 18-65 years.
- Both salaried and self-employed individuals can apply for Home Loans.
- The most important factor lenders look for is your loan repayment capacity. Lenders see how much salary/ earnings you spend to pay for all your EMIs and credit card bills.
- Your CIBIL score should be above 700.
Check your HDFC Home Loan eligibility using a Home Loan Eligibility Calculator.
- Identity and Address proof- PAN Card, Voter ID, Passport, Aadhar Card, Driving License.
- Income Proof- Salary slips for salaried individuals. Audited balance sheets for self-employed individuals.
- Property Documents- Buyer agreement or a copy of your flat allotment letter.
The property’s title deed and any previous documents if a resale took place.
What are the different types of Home Loan options in India?
You can take a loan to buy a flat or a piece of non-agricultural land to build your house on. The other loans available are Home Construction and Home Improvement Loans.
Options in Home Loan interest rates
Home Loan lenders offer you either Fixed or Floating interest rates.
Fixed Home Loan interest rates stay the same for the entire tenure. Floating interest rates vary according to market conditions.
There are no pre-closure charges applicable on Floating (interest) Home Loans.
HDFC Home Loan Fixed interest rates are 1-2.5% higher than Floating interest rates.
How much of the property value do Home Loan lenders fund?
For finished apartments, Home Loan lenders could fund up to 90% of the property value.
For land purchases, the maximum value funded is 75% to 90% of the land value. Location is an important deciding factor for Plot Loans. It is easier to get Home Loans for apartments than to get Plot Loans.
When you take a Home Loan, it’s best to pay 30-40% of the property value as the down payment. Doing so will reduce the Home Loan’s interest burden on you.
Tax Benefits on Home Loans
You can claim for tax benefits on your Home Loan’s principal and interest amount.
Income Tax benefits on the Home Loan principal amount
As per Section 80C of the Indian Income Tax Act, you get a tax benefit of INR 1,500,00/- per year on the Home Loan principal amount.
Income Tax benefits on the Home Loan interest paid
Section 24 states that the interest paid on your Home Loan qualifies for tax benefits too. You can claim for interest payments up to INR 2,00,000/- per annum.
Exclusive Tax benefits for first-time home buyers
Section 80 EE allows an extra deduction of INR 50,000/- per year on your first home purchase. The other conditions are that the property value shouldn’t exceed INR 40,00,000/-. The Home Loan amount for this deduction gets capped at INR 35,00,000/-.
For getting tax benefits, your Home Loan should be from a recognised financial institution- a bank or a housing finance company. The property must be self-occupied.
Some Home Loan tips
- Get an idea of how this new EMI will fit in your monthly expenses. See what effect would it have on your spending habits. This exercise will help you manage your monthly budget.
- Try not to use more than 40% of your monthly income to pay all your loan EMIs.
- Though at this stage, retirement seems far away, do not put off investing for it.
- Keep enough provision for emergencies. Park at least 3-6 month’s expenses aside.
- Make sure you have enough life, disability and health insurance cover.
How to get the best deal on your Home Loan?
Always shop around before you decide. Spend some time and talk to many Home Loan lenders. See who is ready to offer you the best terms. Get a review of their quality of customer service.
Once you finalise your Home Loan lender, submit your paperwork well and above all, don’t skip reading the fine print. Ask your Home Loan lender to explain all the terms and conditions in detail.