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Personal Loan

Is a Personal Loan or a Credit Card Better for Travelling?

Loans are the best possible way to fund your needs and not put much stress on your budget. There are a lot of things that you need to keep in mind regarding loans. Be it a credit card or a personal loan, you need to know about the basics to make an informed decision. When you need instant money, be it for your expenses or meeting your urgent needs, both personal loans and credit cards can help you out. Having said that, there are still many variations between a credit card and a personal loan which you must learn. [B-01] Read on to learn about personal loans and credit cards, the differences between them, and the best option during travelling. Personal Loan for Travelling Expenses A personal loan is a financial tool that you get from a lender to cover your urgent needs. You can use this money to make a down payment, pay for your education, or plan out a trip to a destination. The lender in return charges you with a given rate of interest for a specific period within which you are bound to repay the loan. For travelling purposes, if you are planning for a long stay and you think that you need a lump sum amount, then a personal loan can be the right fit for you. Make sure that you don’t go astray at the same time because it is a form of debt. It will create certain financial distress on your expenses in the long run. Benefits of opting for a personal loan for travelling purposes Low rate of interest: Lenders charge a low rate of interest on a personal loan. So, you can easily repay the loan. A low rate of interest enables you to smartly better your expenses and plan your finances. No collateral: Banks and NBFCs don’t ask you for collateral for a personal loan as it is an unsecured loan. You don’t have to pledge any of your assets to get the loan. The long tenure of repayment: The loan tenure is longer for personal loans. The range is between 12 months to 72 months. You have to pay the loan amount in EMIs till the loan period ends. Quick approval: The approval period is quick, often between two to three days. Once all your papers are verified and you get a loan sanction letter, the amount will be sent to your account within this period. Easily payable: Banks and NBFCs need you to pay the loan through EMIs. This option makes the repayment process easier to manage. There are other options like a “Flexi” option in which you only have to pay the interest for the amount you utilise, instead of paying for the entire amount. Using credit cards for travelling purposes Credit cards are a great form of short-term debt that allows you to use money up to a certain limit. At the end of the month, you have to repay the amount, failing which you will be subject to late payment fees and charges. Credit cards are a great way to prevent unnecessary splurging and good credit points are always going to help you, be it in loans or while availing any offer. For short-term travelling purposes, where you think that the expenses are not at all on the higher side, you can consider using a credit card. Benefits of using a credit card for travelling purposes Easy to apply: You can apply for a credit card online at any time in a few basic steps. The benefit of a credit score: With a good credit score, you can easily avail of any type of loan, be it a personal loan or a business loan. Getting a credit card is an easy way to create a credit history and get a high credit score. Discounts and cashback: Using your credit card to pay your bills at restaurants and while shopping, often helps you in availing discounts and cashback. Which is better for travelling: a credit card or a personal loan? The answer is both of them can be used to cover your travelling expenses, depending on the place you visit and the duration of your stay. Credit cards have their own benefits, but a major benefit is free stays, free lounge use and discounts at restaurants. Some banks often give you these benefits for credit cards and not for debit cards. But, it is also vital to keep in mind that credit cards are known as revolving debts, and the interest rates are quite high. In the case of a personal loan, you get a lump sum amount to use for your trip to your favourite destination. You can use this corpus to plan a vacation with your family and repay the amount in EMIs. The interest rates are also low, and you get a lot of time to repay the loan. But, if you just need a little amount of money and your stay is going to be on the cheaper side, then you might not avail of a personal loan. [B-02] Conclusion So, the answer depends on the purpose of your travelling: if you want to make a trip for a shorter duration where the expenses are going to be minimal, go for a credit card and if your stay is going to be expensive, then a personal loan is more suitable. Before you plan your trip-related expenses, make sure you assess both options before making an informed decision. Visit Piramal Finance to get the best offers on personal loans with low-interest rates. You can also check the blogs and articles on the platform to boost your finance skills.

08-11-2023

Tax Savings

Tax Benefits on Business Loan in India

A business loan is a form of debt financing. With business loans, you can buy assets, pay for expenses, fund new firm tasks, or repay existing debt. As with any other type of financing, business loans are also subject to taxation under the Income Tax Act. This means that you must know how income tax laws in India may affect your business loans. You can plan your finances keeping that in mind. The Indian government offers many tax benefits on business loans. If you have taken out a business loan and are paying off EMIs each month, you can claim these in your income tax return. This article will discuss the tax benefits on business loans in India. [B-01] What is a Business Loan? A business loan is a type of loan given to firms to help fund their tasks. Banks, NBFCs, NBFC-MFIs, and other financial firms may provide the loans. Firms take out loans to finance their tasks or fund growth plans. The process is quite simple. You approach a lender with your business plan. It should have details about your firm’s fiscal health and projected profit. The lender will then decide whether or not they want to lend you money. Types of Business Loans Available Many business loans can help you fund your firm growth, expansion, or cost of buying assets. There are two types of business loans: Term Loans A term loan is a long-term debt repaid over an agreed time. It is paid in instalments over four to five years. A lender can get a loan against real estate assets. It can be sold if the person defaults on payments. Working Capital Loans A working capital loan needs short-term financing for day-to-day tasks. Although some lenders offer longer repayment time, it is repaid within one year at most. How to Qualify for a Business Loan The Indian government has made it easier for firms to get loans by offering tax benefits on business loans. The purpose for which a business loan is sought is one of the most important factors in business loan eligibility. A business owner can take up a loan for two reasons: to start their own business or expand it. For this reason, you need to be sure that your application clearly states what you want to do with the loan sum. Small firms generally qualify for business loans at a lower rate than large corporations. However, they may have to provide collateral in the form of real estate or equipment. Lenders consider your credit score and financial history while evaluating loan applications. Most lenders require you to have at least three years of operating history before applying for a business loan. Lenders also want to make sure you can afford the monthly payments on the loan. This process is called underwriting and determines whether you qualify for a business loan. Lenders will also ask about your business plan. They may also request proof of you knowing how you will use the loan amount. You should also be able to provide documentation of your current business assets and liabilities. Tax Benefits on Business Loans A business loan has two components: the principal amount and interest. It includes low-interest rates and long repayment time, making it cheaper than other types of loans. Moreover, you can claim tax benefits on business loans. The interest component of a secured business loan is not tax-deductible unless used to purchase immovable assets like commercial property or land. Business owners can only claim tax benefits on business loans for the principal amount paid to the lender. Interest Paid on a Business Loan is Tax-Deductible The interest paid on a business loan is an expense of the business. It is not taxable to calculate income tax. First, the rate on the debt must be paid from the business’s income, not from any other source. Second, the debt must be incurred by the business. In addition, only the principal amount paid back will be eligible for the deduction. You can deduct the rate you pay on a business loan from your taxable income. It includes loans to buy or improve land, buildings, and machinery. The Principal Amount of the Business Loan is Not Tax-Deductible The principal amount is the total financing or loan amount sourced from the banks or NBFCs to finance business tasks. A business loan’s principal amount is not tax-deductible. Paying income tax on the principal or borrowed amount is not necessary. Additionally, you cannot deduct the amount from your income. Taxes are generally due on the net profits generated by entrepreneurs in a financial year. This is true for most types of business loans. The principal amount borrowed is not subject to tax. The net income earned by the business owner is exempted from tax. Tips to Get a Business Loan In case you are wondering how to get a business loan in India, here are some tips: Research the banks and NBFCs offering loans through their websites or by contacting them personally. Compare the interest rates and repayment tenure offered by each lender before making a choice. Check if you will get any freebies along with the loan amount, such as travel or accident insurance. Ask about these benefits before applying for a loan. Finally, remember to stay organised and track all your expenses. Keep good records so there will be clarity when tax time comes around. [B-02] Conclusion Business loans may be a game changer for you as an entrepreneur or seasoned business owner. The funds might be utilised to expand the business or to start a new firm. The tax benefit on business loans through interest payments and certain company costs such as salary or bonuses might affect your ability to get a rapid business loan. Before asking for any business loan, you should constantly assess your company’s needs in light of the current market. Business owners who take out company loans may benefit from tax breaks. This is especially since business loans are tax-deductible. To learn more about the tax benefits on business loans, do visit the website of Piramal Finance. They provide a variety of products and services and also have many informational blogs on various topics.

08-11-2023

Home Loan

Top Reasons Why You Should Pay The Home Loan Last If You Have Multiple Loans

Every household in India has multiple loans and EMIs to take care of today. When you have a salary coming in monthly, it becomes easier to pay off the monthly EMIs of the loan than to pay a huge amount at once. Though taking loans while keeping an eye on your cash flow and expenses is always a smart decision. It will save you from complications in handling your finances later. There are multiple types of loans that are common in every household, such as home loans, vehicle loans, personal loans, credit card EMIs, etc. But life almost always comes up with surprises that you are not always ready to tackle. Similar ones are job loss, medical emergencies, or other unexpected expenses. These kinds of emergencies and expenses make it very hard to keep track of all the EMIs. [B-01] In those times, it is very important to decide what EMIs/ loans are needed to pay off first, which one to pay off last and which one you can pass. To help you make a smart decision and make it easier for you, we have a list of reasons why you should pay home loans at last. It doesn’t only give you relief for some time but also helps you attain some benefits that you may not know of. On that note, here are all the reasons why you should be paying your home loans at last. List of Reasons Why You Should Pay Your Home Loan at Last Cheapest interest rate The most affordable loans are those for homes virtually invariably. It is better first to pay off the loans with the highest interest rates. These typically include personal loans and credit card debt. These loans have interest rates that can go up to 20%. On the other hand, some banks provide house loans with interest rates as low as 7% for specific sorts of borrowers. Look into strategies to lower your interest because it is on top of the principal. It is best to pay off the personal or credit card debt first because it has the highest interest rate. The next topic should be auto loans. Auto loans typically have fixed interest rates that are higher than those for mortgages. They currently stand around 7—8%. Auto loans should be repaid after a personal loan because the interest rates are higher than those on a home loan, and they are for depreciating assets like autos. Tax Advantages You can deduct interest and principal payments made on your home loan from your taxes, unlike personal loans, credit card debt, and auto loans. Home loans should be paid back after all other debts because they have tax advantages. There are advantages to house loans, such as tax deductions for both principal & interest payments. This is advantageous over time because a house or property is an asset that appreciates, so you can attempt to hold onto it for some time. You may deduct the main portion of your EMI payments for the year up to a maximum of Rs 1.5 lakh under Section 80C of the Income-tax Act. If you don’t sell the property within five years of receiving it, keep in mind that you can still claim this deduction. You may deduct up to Rs 2 lakh from the interest portion of the EMI by Section 24B. The house must be purchased or built using this loan and completed within five years of the end of the fiscal year in which the loan was obtained. Home/ Building — An Investment Remember that a home loan is distinct from other types of loans as it assists you in acquiring an asset. A consumer loan or vehicle loan might also assist you in purchasing an asset. These assets, however, lose value over time, unlike a house. There is no greater sense of success than repaying a loan before it is due or having it taken away. You should bear in mind that there are additional fees for paying off a personal or auto loan early. These fees are not included in the majority of house loans. After paying off the total closing sum, don’t forget to get the lender’s “No Objection Certificate” (NOC). The closing will then be recorded in the credit bureau’s database. Remember to request and obtain your original documentation and the lien release from the property or vehicle you pledged. Final Words Paying off loans is relieving, but knowing which loans to pay first and educating yourself about the benefits and deductions you are eligible for certain loans is advised. Always learn and get all the required information about the loans you are taking, the EMIs you have to pay, and the consequences of payoff, passing, or delaying an EMI. Piramal Finance is an Indian financial services company that provides personal loans, business loans, housing loans, and other financial products for you with a very simple process. Visit our website today for a simple and seamless instant personal loan process. [B-02] FAQs Is having many loans a smart idea? Multiple loans might be an excellent strategy to improve your credit score. However, this is only useful if you can return all of your debts on time; otherwise, the move will be bad for your credit health. Is it possible to receive a personal loan if I already have a house loan? Yes, there is no upper limit on the number of loans that can be obtained at the same time. Technically, a personal loan and a home loan can be obtained concurrently. The prospect of repaying two debts at the same time may be intimidating. However, taking out both loans at the same time might be advantageous. If you have personal debt, is it difficult to secure a mortgage? A personal loan will always have a negative influence on your serviceability, even if it won’t make or break your prospects of getting a house loan,” the expert said. Any debt is a liability, and the more liabilities you have, the more difficult it will be for you to pay back your mortgage.

08-11-2023

Tax Savings

Everything You Need To Know About Tax Benefits On Personal Loans

Personal loans can come in handy for many reasons, such as meeting financial needs or taking care of unexpected expenses. There are a variety of loans available from different banks, depending on your needs. Today, we’ll discuss the tax benefits on personal loans. Buckle up, it’s time to take a financial ride! A personal loan is a type of unsecured loan that can be used for a variety of purposes, including consolidating debt, financing a large purchase, or covering unexpected expenses. Personal loans are available from banks, credit unions, and online lenders, and typically have terms of three to five years.In India, personal loans are subject to the same laws and regulations as other types of loans. However, there are some unique aspects of personal loans in India that borrowers should be aware of. [B-01] First, personal loans in India are typically only available to borrowers with good or excellent credit. This means that if you have a history of late payments or other negative information on your credit report, you may not be able to qualify for a personal loan.Second, personal loans in India typically have higher interest rates than other types of loans. This is because personal loans are unsecured, which means they are not backed by collateral. In India, the tax benefit of a personal loan is the amount of money that the borrower can save on taxes by taking out a personal loan. This tax benefit is available to both salaried and self-employed individuals. The amount of tax benefit that a borrower can avail of depends on the interest rate of the personal loan and the income tax bracket that the borrower falls under. For salaried individuals, the tax benefit on a personal loan is available only on the interest component of the loan. The principal amount of the loan is not eligible for any tax benefit. The interest component of the loan is eligible for a deduction of up to Rs. 1.5 lakhs from the borrower’s taxable income. This deduction is available under Section 80E of the Income Tax Act. The tax system in India can be quite complicated, especially when it comes to loans. There are a variety of taxes that can be applied to loans, and the amount of tax you pay can vary depending on the type of loan you have. Here is a brief overview of the tax system for loans in India. The first type of tax is called interest rate tax. This tax is applied to the interest you pay on your loan. The rate of this tax varies depending on the type of loan you have, but it is typically around 10%. The second type of tax is called stamp duty tax. This tax is applied to the total value of the loan. The rate of this tax varies depending on the state you live in, but it is typically around 0.5%. The third and final type of tax is called service tax. This tax is applied to the service charges you pay on your loan. For self-employed individuals, the tax benefit on a personal loan is available on both the interest and principal components of the loan. The interest component of the loan is eligible for a deduction of a certain amount. Here is everything you need to know about the potential tax benefits of personal loans. If you use a personal loan to consolidate debt, you may be able to deduct the interest you pay on the loan from your taxes. This can be significant savings, particularly if you have a high-interest rate on your loan. You may also be able to deduct the interest you pay on a personal loan if you use the loan for business purposes. This includes using the loan to purchase equipment or inventory for your business, or to make improvements to your business premises. Finally, if you use a personal loan to pay for education expenses, you may be able to deduct the interest you pay on the loan from your taxes. This can be a valuable tax break for those pursuing higher education. Personal loans can offer several tax benefits, depending on how they are used. Many tax benefits come with taking out a personal loan. Here are some of the most common questions that taxpayers have about these benefits:1. Can I deduct the interest I pay on my loan?Yes, you can deduct the interest you pay on your personal loan from your taxes. This deduction is available whether you itemize your deductions or take the standard deduction.2. Can I deduct the origination fees I paid on my personal loan?No, you cannot deduct the origination fees you paid on your personal loan from your taxes. These fees are considered part of the cost of borrowing money and are not tax-deductible.3. Can I deduct the prepayment penalty I paid on my personal loan?No, you cannot deduct the prepayment penalty you paid on your personal loan from your taxes. [B-02] Conclusion Personal loans can offer several tax benefits, depending on how they are used. If you enjoyed reading this blog, don’t forget to stick around and read more finance-related blogs on Piramal Finance to know more about personal loans! Browse to learn more about their products and services.

08-11-2023

Personal Loan

Personal Loan Advice and Tips for Students and Professionals

Are you worried about your education fee? Are you stressed about getting a personal loan for your profession? You are not alone. A lot of people feel anxious and overwhelmed when it comes to their finances. But don’t worry, this article goes over student personal loan advice and tips for both students and professionals. [B-01] What Is a Student Personal Loan and Why do Students Need it? A student personal loan is a type of loan taken up by students. As students don’t have a job and not enough funds for higher education, they resort to education loans and student personal loans. Professionals also take loans to further their profession. These loans are for peope who are going for professional courses like CA, CFA etc. These loans don’t require any collateral. Why do students need loans? Studies Extra curricular activities Daily chores Why do professionals need loans? Enhancing skill set Moving to a new place for a job Studying more Career growth A student might need a loan for their studies, books, any extra curricular activities and much more. A professional might need it for their career growth. How Can a Student Personal Loan Help Students and Professionals? Students do not have money for basic needs. Let alone any form of money for higher education. This is why students go for loans. It is either to take coaching classes for higher education or to live their daily life. So you’re a student and you need to borrow money for tuition. Or you’re a professional and you need to borrow money for a new business venture. What do you do? You could go to a student personal loan company and get the money you need in a lot less time. How does the loan help a student or a professional? Eases the mental burden on the students life. Helps student focus more on studies than finances. Makes the student on par with other rich kids. Personal loans for professional companies are experts in lending money, so they know how to make the process as smooth and stress-free as possible. They work with students and professionals every day, so they know what kind of loan for the profession is best for each situation. And they have a wide variety of loans for professions available, so you’re sure to find one that fits your needs. How to Apply for a Personal Loan as a Student and as a Professional? Now that you know all about student personal loans, it‘s time to learn how to apply for one. The application process can seem daunting, but it’s not that difficult. Here are the steps you need to take: Check your credit score Your credit score is one of the most important factors lenders look at when deciding whether to approve your loan application. Gather your documentation.You’ll need to provide proof of identity, income, and residence. So gather your driver’s licence, Social Security card, pay stubs, and utility bills, and have them ready to go when you start the application process. Complete the online application formThis is where you’ll provide all of your personal and financial information. Be sure to answer all the questions accurately and honestly. The lender will be checking your credit score and looking into your financial history, so there’s no room for mistakes. Wait for a decisionOnce you’ve submitted your application, it will take a few days for the lender to review it and make a decision. If you’re approved, you’ll receive a loan agreement detailing the terms of your loan. Tips for Choosing the Right Personal Loan When it comes to choosing the right student personal loan, there are a few things you need to keep in mind. Here are a few tips: Do your research: It’s important to compare different lenders and find the best deal for you. Consider your needs: Make sure you’re taking out a loan for something you need, and not just for luxury items. Check your credit score: Make sure your credit score is in good shape so you can qualify for the best interest rates. What Are the Interest Rates for Personal Loans? When it comes to student personal loans, you want to make sure you’re getting the best interest rate possible. After all, you don’t want to be paying a fortune in interest every month. So, what are the interest rates for student personal loan? Well, it depends on the lender and your credit score. But generally, student personal loan interest rates range from 3% to 36%. So, it’s important to shop around and compare interest rates before you decide on a lender. How to Use a Personal Loan Calculator? The great thing about personal loan for profession is that they can be used for a variety of purposes. But before you apply for one, it’s important to understand how they work. That’s where a personal loan calculator comes in handy. A personal loan calculator can help you figure out your monthly payments, as well as the total amount of interest you’ll end up paying over the life of the loan. It’s also a good way to compare different loans and find the one that’s right for you. How to Get Approved for a Personal Loan? So you want to get a student personal loan, but you’re not sure how to go about it? Well, we’re here to help. The first thing you need to do is make sure you’re eligible. Most lenders will require that you be over 18 years of age and have a regular source of income. Agencies can help you find the best loan for your profession for your needs and ensure you don’t get in over your head. [B-02] Conclusion This article’s goal is to provide a thorough analysis of crucial considerations for student Personal Loan Advice, Tips for Students & Professionals. Taking out a student personal loan can be a big decision, but it can also be a helpful way to finance your education or consolidate your debts. If you’re looking for additional information on loans, mortgages, MSME financing, personal loans, business loans, and even a handy loan calculator, check out the many resources provided by Piramal Finance.

08-11-2023

Tax Savings

Is There Any Tax Benefit On Personal Loan?

Getting a loan could be a good option if you need more funds to pay for significant life events. When it comes to events like a wedding or a vacation, you are always short on cash and need some more. In this kind of scenario, you can get a personal loan. Apart from being able to meet your urgent needs, tax benefits on personal loan are an added benefit. The application process for a personal loan is simple, and only some basic rules must be satisfied. You will be making payments on a personal loan through EMIs. You might be thinking about getting a personal loan, but before you do, you should find out if there will be any tax implications. [B-01] Can you write off the interest you pay on a personal loan? The Income Tax Act does not state any specific tax benefits on personal loan; but in fact, such loans are still eligible for tax benefits. You may qualify for tax benefits if you have a personal loan and use it right. There are three cases in which you could be eligible to get a personal loan tax deduction. Read on to learn more. Interest Payment on Personal Loan Used for Business When a firm wants to expand, loans are often used as a capital source. Your interest payments on a personal loan used to start your business can be claimed as tax benefit on personal loan. This personal loan tax deduction is available to all small businesses that file their income tax returns on time. Purchasing or developing a house as an investment It is possible to deduct the interest paid on a personal loan used to improve your home as a tax benefit on personal loan. This is given in Section 24 of the Income Tax Act and applies to other home projects of a similar nature. Keep in mind that the only person who may obtain tax benefits on personal loan is the property owner. If the interest on a loan you took out and repaid was paid from your funds, you could deduct those payments from your taxes. However, if you took out a loan from a non-bank lender, such as your parents or other relatives, you cannot claim the interest you paid on that loan. Acquisition of things of value Under Section 80C of the IT Act, the interest paid on a personal loan used to acquire goods such as jewellery, non-primary residences, enterprises, or stocks is valid for tax benefits on personal loan. This provision offers investors the potential to reduce the amount of revenue subject to taxation. The borrower must factor in this amount when figuring out the cost basis for future tax advantages. Important Information About the Personal Loan Tax Deduction Because the person receiving the money does not consider the money to be income but rather a loan, there is no need to pay income tax on it. To be eligible for a deduction, there has to be proof that may satisfy the need to show that the money obtained via a personal loan was used for the given objective. To claim income tax benefits for a personal loan, retain a copy of all key papers, including the amount of the loan obtained, the amount and interest that must be paid, and any other useful data. Personal Loans for Tax Savings Personal loans are eligible for tax exemptions as well. However, tax breaks are only available on rare occasions. The amount of the loan you can deduct from your taxes depends on how you intend to use the money. You may be able to use a personal loan to claim tax benefits in the following situations: Home Remodeling According to Section 80C of the Income Tax (IT) Act, a tax deduction for a personal loan used for home projects of up to Rs. 1.5 lakh can be claimed for each year. Hence, if you get a personal loan to fix up or rebuild your home, you may be eligible for a tax benefit on personal loan as a result of doing so. Acquiring or building a home Suppose you acquire a personal loan to buy or fix a home. In that case, you can deduct up to Rs. 2 lakhs of interest from your income, as per Sec. 24 of the IT Act. This allows you to reduce the tax you owe on your income. To avail of tax benefits on personal loan, you must own the property in question. Investment in a business If the loan funds are used to invest in a business, the interest component of the loan can be deducted as a business cost. This may help the business owner reduce net taxable earnings and, as a result, income tax liabilities. Acquiring assets Those profits may be exempt from taxation if the proceeds from a personal loan are used to purchase non-residential real estate, jewels, stocks, or shares. The interest on the loan may be included in the cost of acquiring the item. As such, the capital gains obtained from the asset’s sale are reduced. [B-02] Conclusion Personal loans are not taxable, although they may help with tax deductions. That, however, depends on the goal of the personal loan. As previously stated, there are three scenarios in which tax benefits for personal loans can be claimed. As a result, as a borrower, you can avail of these tax benefits to reduce the cost of a loan for you. If you need a personal loan with minimal paperwork and a payout within a few hours of the process, visit Piramal Finance to get the best deals.

08-11-2023

Tax Savings

Know the Tax Benefits of a Joint Home Loan

Having your own house is a dream for many. A home is a “once-in-a-lifetime” investment that gives you. Buying a house is no cakewalk (primarily due to fluctuating market prices). With so much competition between buyers, financing a home can be difficult. Many turn to loans to help them finance a new property. A housing loan is a viable option. However, sometimes even qualifying for housing loans can be difficult. In this case, you can apply with a partner for a joint home loan. Do you want to apply for a joint home loan but are confused? You will find the correct answer to this question in this article. This article discusses all you need to know about joint home loans, their benefits, and all the tax exemptions available to applicants. What is a joint home loan, and what is its significance? A joint home loan is a form of financial assistance you take from a lender with a co-borrower to build or buy your own house. The co-applicant can be an immediate family member or your spouse. If you don’t qualify for a home loan, you partner with another person, and both can repay the loan. You and your co-borrower share the responsibility of repaying the loan at a specific interest rate. The lender gives both of you a stipulated time limit within which you have to repay the debt in instalments. What are the benefits of applying for a joint home loan? There are several benefits to choosing a joint home loan. These benefits are as follows: A larger loan can be sanctioned. Lenders allow a larger loan amount as two borrowers bear the repayment responsibility. The loan amount can go as high as Rs. 10 crore or even more in some cases. However, this depends on your and your partner’s income, CIBIL score, creditworthiness, etc. The risk is reduced. As the housing loan is taken on a joint basis, the responsibility falls on the shoulders of both borrowers. So, the level of accountability is lower, and as a result, banks are less concerned. The tenure of repayment is longer. In India, most banks allow a tenure period of 30 years for joint home loans. If you have applied for a home loan alone, you will probably not get a longer tenure for repayment. The approval process is faster. The approval period varies from bank to bank, but most loans are approved within 3-5 days. Some also provide pre-approved joint home loans. You get appealing interest rates. In India, the interest rate for joint home loans starts at 8.25% per annum. Adding your spouse as a co-applicant will give you an additional discount on the interest rates. What are some of the tax benefits of applying for a joint home loan? If you and the co-applicant are contributing together to the repayment process, there are twin tax benefits that both of you will be enjoying. First, under Section 80(c) of the Income Tax Act, 1961, you and the co-borrower can claim a tax exemption of up to Rs. 1.5 lakhs per annum on the principal amount. Second, under Section 24(b) of the Income Tax Act, 1961, each co-borrower can claim a tax deduction on the interest of the loan, which is up to Rs 2 lakh. What are the conditions to claim tax benefits on a joint home loan? Here are certain conditions that you need to fulfil to claim tax benefits for a joint home loan: You should also be mentioned as the co-owner of that property. You may not be able to claim the tax benefits if you do not have the property registered in your name. Since it is a joint home loan, you can only claim the tax benefits if you own that property. You have to be a co-borrower on the joint home loan. According to the loan documents, you must also be an applicant for the loan in addition to being a co-owner of the property. Otherwise, you cannot claim benefits under these sections. Tax benefits can be claimed only if the construction of that property is complete. You cannot claim any tax benefits if the property is incomplete or under construction. Under-construction properties are strictly prohibited from receiving any tax benefits. What are the joint home loan tax benefits? For two different categories, there are many benefits: For the borrowers who own the property: If you and the co-borrower co-own the property, each of you can claim a tax deduction of up to Rs. 2 lakh on the loan amount. The total interest paid by both is divided between the applicants in proportion to their stake in the property. For the borrowers who rent a property: If you and your co-borrower jointly claim the house, you can ask for larger tax advantages against the interest you pay on the joint house loan as a family, provided that the interest is more than Rs 2 lakh per year. [B-02] Conclusion A joint home loan is a great way to get financial backup to build a house for your family. It can help you get a larger loan amount because the risk is divided. Furthermore, the tax benefit is often shared between you and your co-applicant. The tax benefits are divided according to the percentage of the property you hold. Ownership is the fundamental requirement to get any tax benefit, and the whole system is different if you have a rented property.

08-11-2023

Tax Savings

What Are the Home Loan Tax Benefits in 2022: All You Need to Know

Almost everyone dreams of owning a house. However, everyone does not have adequate resources to buy one instantly. While some save money, most people apply for a home loan. A home loan includes the principal repayment and the interest amount. Both the interest and the principal amount qualify for tax deductions. Under the Income Tax Act of 1961, the Indian government offers various tax benefits on home loans. Hence, if you are planning to buy or build a house, you should know the home loan tax benefits provided by the government. [B-01] Home loan tax benefits in 2022 The tax benefits that apply to various types of home loans in 2022 are as follows. Home loan tax benefits under Section 80C: Repayment of the principal amount You can avail of a maximum deduction of Rs 1,50,000 each year on the principal repayment portion of your home loan EMI. This income tax benefit applies to both rental and self-occupied properties. You can claim the stamp duty and registration fees once and only in the same financial year. The total deduction cannot exceed Rs. 1,50,000 per year under Section 80C. Furthermore, you must have a fully constructed property to claim this home loan tax benefit. You cannot avail of this benefit if you sell your property within five years of possession. All tax deductions claimed will be reversed if you sell your home before five years. Furthermore, the sale amount will be added to your income. Home loan tax benefits on interest payments under Section 24 Under Section 24(b) of the Income Tax Act, you can claim a tax benefit on the interest you pay on the housing loan. In the case of a self-occupied house, you can avail of a deduction of up to Rs. 2,00,000 on the payable interest amount. If you own two houses, the aggregate tax deduction cannot cross Rs. 2,00,000 per year. If you have rented out your property, you can claim the total interest you are entitled to pay on your housing loan for construction, purchase, repair, reconstruction, or renewal as a tax deduction. However, under the Income from House Property Act, the loss adjusted against income cannot be more than Rs. 2,00,000. You can carry forward the remaining loss amount for eight years to accommodate the loss against the income accrued from the house property only. Only the home loans sanctioned on or after 1st April 1999 are eligible for these deductions. If you purchased a property still under construction and are paying EMIs, you can claim the interest payable on your home loan as a deduction once construction is complete. The Income Tax Act of 1961 allows you to claim a deduction of the interest payable during and after construction. The interest payable during the pre-construction period can be given as a deduction in five equal annual instalments. These instalments start only after construction is complete. Home loan tax benefits under Section 80 EEA: Interest on home loans for first-time buyers The interest amount you need to pay on your home loan is also liable for an extra deduction. A maximum of Rs. 1,50,000 can be deducted. However, to be eligible for this home loan tax benefit under Section 80 EEA, you need to fill in the following criteria: To purchase a residential home, you should borrow your home loan either from a housing finance company or a financial institution. Only the loans approved between 1st April 2019 and 31st March 2022 are eligible. The housing property stamp duty cost should be less than Rs. 45,00,000. The taxpayer must be a first-time buyer. If you and your partner own the housing property together and contribute towards the loan repayment, both are eligible to claim deductions. Both resident and non-resident owners can claim home loan tax benefits under Section 80 EEA. Since the 2022 budget has not extended the deduction benefit available under Section 80 EEA, individuals taking a housing loan on or after 1st April 2022 will not be eligible for this benefit. Home loan tax benefits under Section 80C and Section 24: Joint home loans on the principal amount and interest payment If you have applied for a housing loan with a spouse or partner, both can avail of a deduction of up to Rs. 2,00,000 on the housing loan interest payments under Section 24(b). Each party can also claim a deduction of up to Rs. 1,50,000 on the principal repayment amount under Section 80C. In this case, the tax benefit is doubled compared to the benefits available for a loan taken by a single party. However, to be eligible for this home loan tax benefit, both parties must be co-owners and should pay their EMI payments without fail. Home loan tax benefits under Section 80EE Under Section 80EE, first-time buyers can avail of a maximum deduction of Rs. 50,000 on the payable interest payable on their home loan in the following cases: The monetary value of the acquired property is not above Rs. 50,00,000, and the loan amount is at most Rs. 35,00,000. The home loan should have been approved between 1st April 2016 and 31st March 2017. You can benefit from the advantage offered by this deduction till the repayment of the loan continues. This deduction has been made accessible from FY 2016-17 and is still in effect. [B-02] Conclusion You can easily own your dream home with the help of a housing loan. Although a home loan can be an additional burden, you can somewhat lessen its weight by availing of the various government-backed home loan tax benefits. Contact a financial expert if you do not understand the various tax benefits or the details of tax deductions. You can now transform your dream of owning a house into a reality with the different types of home loan options provided by Piramal Finance. Piramal Finance is a housing finance company registered with the National Housing Bank (NHB) and provides retail and wholesale funding opportunities across sectors. Unique features like zero prepayment and foreclosure charges, minimum documentation, quick sanction, and instant disbursals make Piramal Fiance stand out. Reach out to experts from Piramal Finance to understand more about the different types of home loans.

08-11-2023

Home Loan

Pro tips to reduce home loan interest rate in the current time

Having a house of your own is a great accomplishment but with that comes the burden of repaying the housing loan. At times the burden keeps on banking on your shoulders and ineffective planning can even cause you more trouble. Having said that, there are many things that you can do about it. You can reduce your housing loan interest rate by just making some smart choices and investing correct strategy. This article will let you know more about the housing loan and its benefits, the factors that influence your installments, and some of the best ways to reduce your interest rate. [B-01] What is a housing loan and what are the benefits of going for it? A housing loan is financial assistance that you take from a lender to buy, renovate, or construct your house. In return, the lender charges you an interest rate which is added up to the installments that you pay on regular internals. The lender also gives you a set period within which you have to clear all your dues. There are many benefits of applying for a housing loan and they are: Tax benefits: This is one of the biggest advantages of applying for a housing loan at the current time. To encourage people more and more to have their shelter and fulfill their dreams of owning a house, the government reduces the tax percentage on both the principal amount and your interest rate. Low rate of interest: Interest rates on housing loans have decreased a lot, especially in this decade. Banks often charge you a low rate of interest on the principal amount so that you can easily pay off your debt in the form of small installments. On top of that, several government schemes aim to provide home loans at low-interest rates. Saves you from paying rent: When you have your own house, you are away from the hassle of paying rent. Paying EMI every month is way better than paying rent for a house that you don’t own. And also, in many cases, the amount of rent is quite high and it gets difficult for you to manage this amount from your monthly budget. Easily payable: Banks give you the option of equated monthly installments or EMI which is a very small amount. So, you can easily cut that off from your monthly budget and pay your EMI at your convenience. The long tenure of repayment: You have options to prolong the period of repayment of your loan amount. In many cases, you can stretch up to 20 to 30 years and steadily pay off your debt. No prepayment penalties: Another benefit of applying for a housing loan is that you don’t have to worry about the extra charges or the penalties in case you want to pay your installment before the scheduled time. You have the authority to pay your due before the arrival of the date of repayment. How to reduce your house loan interest rate at the current time? When it comes to saving money from your housing loan, all you need to do is opt for smart choices. The smarter the choices, the lesser the interest rate and EMI. Due to the unavailability of guidance and consultation, you can get into the mess of paying more than you are expected to. So, three things revolve around this whole concept– the principal amount, the rate of interest, and the tenure of repayment. You just need to adjust them in such a way that you pay less and save more. To reduce your house loan interest rate, you need to follow these simple steps: Reduce your repayment period: It might seem lucrative to opt for a tenure of 20 years or 30 years to repay the existing debt. But what is more important is that you need to reduce your interest rate and to do so you should reduce your tenure as well. Banks charge you a low-interest rate if you reduce your period of repayment. Say, 10 years to 15 years are an ideal preference to repay your housing loan. Make down payments: If you make a down payment at the beginning, your total principal amount is reduced. The lesser the loan amount, the lesser your rate of interest. Make sure you at least pay 25% of your loan amount as a down payment, so that the interest rate becomes tiny as well. Make prepayments whenever possible: Since most banks don’t charge you a prepayment penalty, consider paying it before the due date. Suppose you have surplus money before the month ends and you are not sure if you could save that much till the month’s end, pay it now. You should take advantage of this feature to reduce your rate of interest. Look for balance transfer options: If you are quite uncomfortable with the installment amount and the rate of interest that your current lender is charging, look for a new lender. Look for a lender who charges you less, gives you options with your EMI, and has better terms and conditions. Compare different interest rates: Make sure you conduct a lot of self-research by approaching different banks. Compare different offers, different interest rates, etc. and choose the one that suits you the best. [B-02] Summing it up A housing loan is your way to go to have a house of your own but with it, you also have to repay the debt. And when it comes to reducing your housing loan interest rate, you should make smarter choices and devise the correct strategy. You can use a housing loan calculator to spin different offers and see what you are comfortable with. If you loved this article and you want to read more on this topic, then there is a great website called Piramal Finance. It has multiple write-ups on topics like personal finance, housing loans, investment schemes, smart financing, etc.

08-11-2023