Traditionally, Indians used to hesitate to take home loans till late 90’s. They preferred to construct a House or buy it using either their retirement fund or long-term savings. In the new millennium, Banks have started to reach more consumers and have successfully reached the old and the young generations. Due to rapid Urbanization and due to the increase in the demand for the housing sector, People began to utilize long term home loans. Home Loan Seekers can now easily avail loans from Banks and Financial home loan lending institutions.
Improvement in the standard of living and income of an individual not only contributed to savings but also improved the creditworthiness of the individual. In modern times the young generation of India is ready to buy homes at an early age.
Undoubtedly many of us when we borrow home loan amount we opt for short tenures of EMI and clear the loan as soon as possible. But the real fact of benefit is to choose for the home loans for a long-term tenure EMI that is for more than two to three decades.
Some of the benefits of Opting for long Tenure Home Loans include :
1 ) Eligibility for Higher Loan Amount
The home loan eligibility of an individual is determined by his or her income source. The financial ability for the EMI repayment in the form of EMI’s every month will be fixed by Home Loans. If you choose lesser duration, there would be higher EMI, but also you will be eligible for a smaller home loan amount. On the contrary, if you opt for longer tenure EMI, you will be eligible for Higher Home Loan amount which will help you to buy your dream home.
2) Prepayment options
If you have taken home loan under floating interest rate, then there is no charge on the prepayment of your home loans. Moreover, if you are loan is under a single institution, you can prepay some amount on your fixed rate of interest in addition to the monthly EMI’s. This helps towards the reduction ofoutstanding amount of your home lone without any extra fee. Doing so reduces the burden of the EMI’s and also the time of repayment if applicable.
3) Benefits of Income Tax
Home Loan experts always suggest to take high loan amounts to avail income tax benefits. It is always preferred to opt for a longer tenure. Home loan offers good tax benefits than any other loan. Section 24 of Income Tax Act provides benefits to the borrower on the interest rate of the home loan. In addition, the longer the home loan tenure, the better will be the tax advantage. One and a half lakh is the maximum amount that can be deducted under the section 80C. You can also pre-close the home loan if you would prefer so.
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