Financing your new home through EMI gives a sense of ownness. However, it may be a costly deal but a fair one too. With property rates rising with each passing day, the thought of buying a home through savings appears to be impossible. The most common way to buy a home is through a home loan. A home loan provides you with alternatives associated with the mode of repayment. One easy repayment mode is that of Equated Monthly Installments (EMIs). An Equated Monthly Installment (EMI) is a set sum paid by a lender to a borrower in exchange for taking out a loan. For home loans, there are two sorts of EMIs: full EMI and pre-EMI. You can choose the loan payback plan based on your financial stability. Read on to understand better about Pre EMI and Full EMI. [B-01] Understanding Pre EMI Monthly payments that simply comprise the interest component of your home loan are referred to as pre-EMI. You don’t pay anything towards the principal amount when you use Pre-EMI. When your house or apartment is being built, you will be given the option of paying Pre-EMIs. As a result, a Pre-EMI is a lower payment because it excludes the main component of the home loan. Your lender will urge you to pay the EMI in full after the construction of your property is completed. Remember that a Pre-EMI is not included in the term of the house loan. Its sole purpose is to relieve you of the load of development while your asset is in the works. Understanding Full EMI The usual home loan EMIs that you pay every month for your chosen tenor is referred to as full EMIs. It consists of both the interest and the main components. If you choose the Pre-EMI payment option, the full EMI payment will begin once the construction of your home or apartment is completed. Even if the loan for your under-construction home is still being disbursed in stages, some financial institutions allow you to start paying full EMI right away. Pre-EMI vs Full EMI The following principles will help you understand the Pre-EMI vs Full-EMI financing. Loan disbursals differ: It is that if you choose full EMI, you can get the complete loan amount disbursed; however, if you choose pre EMI, the loan amount is only partially disbursed. Interest rates differ: Because full EMI interest rates are calculated on the entire principal amount. The pre-EMI interest rate is determined using the loan amounts that have been disbursed. EMI payments: In the Pre-EMI option, monthly payments begin as soon as the building begins. The home loan EMIs for the Full-EMI option, on the other hand, do not begin until the property is completed and you have possession. Impact on loan components: Using the Full-EMI option to pay each monthly instalment reduces the principal amount and length of the loan. The EMIs paid through the Pre-EMI option, on the other hand, have no effect on the principal amount, loan payback term, or interest rate. Property resale: With Pre-EMI, the borrower will be able to sell the property shortly after it is completed or within a few years. Individuals who choose the Full-EMI option, on the other hand, will be unable to sell the property for a set length of time. Impact on finances: Paying an EMI through Pre-EMI can be less expensive because the borrower only has to pay interest during the pre-construction period, which is not the case with the Full-EMI option. Tax Considerations The tax effects are the same whether you pay Pre-EMI or Full EMI. Remember that you won’t be allowed to deduct interest on your house loan until the construction of your home is finished. When you get your possession certificate, the amount you paid in interest will be totalled and deducted from your taxes in five equal instalments. [B-02] The Bottom Line Opting for EMI as an option to repay your home loan is like having a key to your home’s door lock. EMI plays a vital role in a home loan. One should be well informed about Pre EMI and Full EMI to make a prudent decision while considering Home loan EMI. Consider either one of them as per your financial suitability.
Buying a home is the pinnacle of achievement for most Indians. It is the labor of their years of effort, sacrifices, and work. However, the modern Indian is more financially literate and savvy. Besides owning a home, many Indians have opted for real estate investing and even using business loans or other means to finance their ambitions. Let us look at some of the best cities in India to invest in real estate. This is a good time to invest in real estate. With significantly low interest rates being offered by most banks, additional interest relaxations for properties under 45L, several upcoming ‘smart cities’, and concessions being offered to developers for timely completion of projects, real estate investments are ripe for the plucking. While these might not be ideal for buying a property in metros or most Tier-1 cities, these are lucrative enough to opt for Tier-2 cities as your venue of choice. [B-01] Factors to Consider While Choosing the City While there are several considerations to be taken into account, some of the critical factors while selecting the city for investment are as follows: Employment Opportunities across sectors Healthcare Facilities Educational Institutions for diverse ages and specializations Mobility, Connectivity and Transportation Safety and Security Infrastructures, like roads, water and electricity Governance and socio-political stability Real estate price trends and future potential Top Cities for Real Estate Investment Keeping the above factors in mind, we take a quick look at 5 of the best cities in India for real estate investing, in no specific order. Navi Mumbai / ThaneWhile Mumbai might be the city of dreams, it is not necessarily known for affordable housing. The space crunch and massive population add to the woes of living in this metro. However, with its expanding borders spreading towards Navi Mumbai and Thane, the available properties are larger and far more affordable. Since these are newer areas, they can boast of well-planned societies offering the choicest of amenities. CoimbatoreCoimbatore is an already well-established industrial and education hub in Tamil Nadu. It is nicknamed the “Manchester of the South’ due to its textile industry. Lately, it has also started attracting automobile manufacturing and IT-enabled services sectors. This implies a lot of job and career opportunities, resulting in a large migrant population who will require housing and avail of other infrastructure that the city has to offer. With its affordable housing rates, investment in this city is expected to increase manifold shortly. IndoreRegularly winning the national award for the cleanest city in the country, Indore is the right mix of modern amenities with affordable surroundings. Situated in Madhya Pradesh, Indore is home to several businesses of different scales and a plethora of other facilities like education and healthcare. In fact, it is one of the few cities that has both an IIM and an IIT. Indore has the potential to provide rich returns on your investment in the next few years to come. VisakhapatnamVizag, as it is fondly known, is a major Indian port city located in Andhra Pradesh and is of strategic and economic importance to the nation. It boasts high educational standards and is one of the prototypes of the ‘smart city’ program. Following in the footsteps of its sister city, Hyderabad, Visakhapatnam has started attracting IT companies and workforce by the hordes. The great climate and lush greenery are added advantages to investing and/or residing in this city. ChandigarhReputed as one of India’s first and most well-planned cities, Chandigarh is highly regarded for its robust infrastructure and multi-connectivity options. Being a Union Territory, several tax and excise benefits can be availed here. With the new airport corridor, the surrounding areas of Mohali and Panchkula have also become rife with upcoming projects and high-rise housing societies. The lush greenery and beautiful backdrop of the Himalayas are an added bonus for a peaceful living environment. [B-02] In Summation While this list is just a guideline, you may choose any city for real estate investing based on your preferences. If you are looking for real estate financing or a business loan, visit the Piramal Finance (PCHF) website, which will help you in this endeavor.
Pre-paying a housing loan is also known as pre closure or prepaid loan. It essentially means the early payment of the remaining loan amount before the date / tenure which was agreed upon during the loan contract signing. People may prepay loans either in part or in full. This is usually as a result of an unexpected windfall or reaching higher levels of earning, which gets the borrower to the situation of being able to clear off the housing loan before the agreed tenor. But while making this decision, it is worth deliberating certain other aspects or alternative viewpoints to be clear in thoughts and action. [B-01] Factors To Be Considered Before Pre-paying a Loan Prepayment or Pre Closure of the loan can lead to big savings due to the interest related expenses which would have been incurred. In case the housing loan is prepaid in early stages, these savings will easily outweigh any other considerations. Hence, loan preclosure in an early stage of the loan period is highly recommended. It is worth checking with your lender if there is any lock-in period involved in the loan contract. This would entail that the loan cannot be prepaid until that lock-in period is completed. Prepayment Charges are an important aspect which need to be considered as well. Banks and non-banking financial companies (NBFC) tend to charge a certain amount which may be 1.5%-3.5% of the loan amount. One may question why a penalty is being charged for earlier repayment of the loan, as the lender is getting their money back before time. Well, the answer is rather simple. The lending institutions make their projections and future investment plan based on the anticipated income through the interest amounts. With early closure of the housing loan, they regain the principal but lose out on the remaining interest, which means making some revisions to their business plans. You need to carefully calculate the amount you expect to save by early payment versus the prepayment charges and decide what seems beneficial to you. It is worth noting that as per the RBI mandate, prepayment charges are no longer applicable on loans with floating interest rates. In Summation Ideally, early repayment of loan whether in part or in full is a beneficial idea since it helps to save huge costs in the form of interest to be paid to the lender. It is extremely beneficial if done in the early stages of the loan tenure to provide the maximum savings. However, if you are at a late stage in the duration of your loan period, this decision is debatable. In such a scenario, you will need to consider the prepayment charges of your lender and then do the calculation whether the savings from interest outweigh the penalty charges or the other way round. Another aspect that may be considered is whether the amount you intend to give the lender for early repayment of the housing loan may be better invested in some financial tool. The returns on such an investment (like in equity-backed tools) may be far more superior to your anticipated savings. Having said that, do note that market returns can never be guaranteed to the frequent volatility of its nature. [B-02] Home loan also offers tax benefits in terms of deduction from the annual taxable income. These benefits will cease to exist after the loan repayment. This is also worth considering in your overall calculations, as it is easy to miss this point. So, it is recommended not to take any decision in haste. Read the loan terms and conditions carefully and invest some time in calculating, in detail, the projected savings versus the money being spent, including the prepayment charges and other penalties.
A housing loan is one of the most common means of securing your own home. Through a combination of competitive rates, long repayment periods and higher borrowing limits, one can finally secure their dream home. While most people who take out a loan are well aware of the interest rates and amounts due, a smart borrower makes the effort to understand all the different types of home loan charges, whether big or small. This is important, especially while doing your due diligence, to choose the right lender to borrow from so that no hidden costs are discovered after the loan has been secured. In the next section, we take a look at some of the most common housing loan charges that you should be mindful of. [B-01] Types of Home Loan Charges Housing Loan Processing Fee Possibly the most important and obvious home loan charge is the Processing Fee. Some lending institutions might also refer to it as an Administrative Fee. It is usually a percentage of the entire loan amount, which is to be paid upfront for the administrative activities involved in procuring and verifying your loan-related documentation. It is worth noting that many banks and non-banking financial companies (NBFC) deem the Processing Fee as non-refundable. This implies that even if the loan gets rejected, the fee will not be returned. So, while choosing the right lender, keep this in your consideration. Administrative charges: While many financial institutions cover all administrative aspects under the umbrella of the Processing Fee, some others may segregate the two. In such cases, the Administrative Charges may be levied, which typically include the cost of verification of the property being considered for the loan. This may involve site visits, structural inspection, legal verification, etc. Most of the time, such work is outsourced or subcontracted to specialized agencies. Hence, this can be considered as pass-through cost. Some lenders might also apply a Login or Application Fee. This may be non-refundable or deducted from the overall charges on housing loan approval. Understanding the break-up and composition of processing and administrative fees is advisable while choosing your housing loan provider. Payment Charges: There are, typically, three kinds of charges that can fall under the Payment Charges bucket. Prepayment Charges: This type of home loan charge is also known as Foreclosure Charge or Pre Closure Charge. It is applicable if you pay off the full remaining housing loan before the end of the agreed upon tenure. There may be times when you would feel you have the financial capacity to repay the entire loan earlier than the original tenure and save on the subsequent interest. However, you should clearly understand the Prepayment Charges and then decide whether it is in your best interest to do so. Late Payment Charges: As the term implies, the Late Payment Charges are incurred when your monthly instalment payment (EMI) is delayed for any reason. To deter people from missing timely payments, the lending institutions levy fairly high penalties, ranging from 2% – 3% each month until the EMIs are paid up and synchronization of payment calendar is regained. Partial Prepayment Charges: While most floating-interest rate loans do not factor this in, you need to know if your particular loan scheme involves such charges. In the case you choose to clear a partial amount of your pending loan balance, you may incur the Partial Prepayment Charges. This will apply each time to make a partial payment and can pile up to a high additional cost. Conversion Charges: Some lenders might refer to it as a Switching Fee. It is levied when you wish to convert or switch from an existing rate scheme to another one. The most common examples include switching from a fixed rate to a floating rate interest scheme or vice versa. Sometimes, this conversion may also result in an alteration of the overall loan tenure. [B-02] In Summation As is evident, there are several charges involved in the process of securing a housing loan. While some of them have been listed above, there may be more that needs to be considered and compared before you choose the ideal lender to help you secure your dream home.
When it comes to loans, collateral is the most daunting term for people. The question seems very basic, but there always remains a lack of clarity about the various forms of properties and their applicability as collateral for a secured loan. The article you are about to read would bust all the myths and clarify the various types of properties accepted for a collateral and secured business loan. What is meant by – Collateral against Loan? Collateral can be an asset that the borrower pledges to the lender as security against the secured loan. It is a supporting medium for a loan transaction as the lender can liquidate it in case of any default in payment, and thus, it acts as a security against the amount being lent by the lender. For example, suppose you want to start a new business for which you plan to take a loan. Your lender would ask you to pledge any collateral like your property or some other kind of security like real estate, bonds, or government securities of the same or higher financial value. Further, once the lender does the assessment and is satisfied with the document, they will easily grant you the loan and fulfill your financial requirements. Various types of Collateral: Collaterals are generally classified as: – Immovable Property/Assets Liquid Assets Immovable Property/Assets are in the form of a house, residential building, or parcel of land. Liquid Assets are easily liquidated, such as Government securities, Bonds, Insurance, Fixed deposits, etc. People often believe that all forms of property qualify for a collateral loan, but this is not true. Read ahead to learn about the types of properties that are accepted for a secured loan. Types of Properties that are eligible to be collateral for the loan: Residential Properties: –The home you live in is rightly said to be your greatest asset. All residential properties qualify for a secured loan; it can be the house you live in, any residential apartment you have rented, or any other form of vacant residential property. Residential properties are the most preferred collateral for lenders, and the loan processes for these assets are highly streamlined. You can continue living in your home, and once you are done paying back all the outstanding loans, you can easily claim back the ownership rights of your residential property. A plot of land: Parcels of land in your ownership can also act as collateral, with the basic requirement of being properly demarcated for identification purposes. The rules regarding land ownership vary from state to state, so just as a matter of caution, refer to your state’s guidelines regarding land ownership. Also, the land you are pledging as collateral should not be agricultural land but free from ownership disputes. Commercial Properties: –Properties following certain specific municipality guidelines are designated as commercial properties. These properties are generally used by enterprises for commercial purposes other than residing. Commercial properties are also in high demand as collateral as they are of huge financial value, and lenders easily accept them as a security against any secured loan. For a commercial property to be eligible for a secured loan, you must check that no residential property falls in its vicinity as per the local municipal guidelines. Properties having more than one owner: –There is a lot of confusion regarding the eligibility of properties with multiple owners for a secured loan. A property having multiple owners can also be pledged as collateral against any secured loan, but only with a basic condition that the said property's ownership must be shared among the close family members, and there should not be any live ownership disputes. The relations preferred in this case are parents and children, siblings, mother-son, etc. Relationships like in-laws, friends, and other parties can also be considered based on the lender's guidelines. [B-02] To Summarize: If you are interested in collateral loans for housing finance or secured business loans for your start-ups, you can refer to various online portals. The most preferred one currently is Piramal Finance.
Now that you have a home loan in kitty, you need to become a financial disciplinarian. EMIs are not scary but they are a responsibility that you need to consider seriously enough to plan the way you handle money and also plan your expenses. When taking a home loan, affordability and flexibility are primary concerns. However, once you sign on the dotted line of a loan agreement, there is no looking back. The only way is forward and knowing a few tricks or tips here and there will help you handle home loan like a pro. [B-01] Rainy Day Fund The importance of having a rainy day fund or even a contingency fund is often discussed. Around you, there might be so many events or occasions that you can never predict. Bad times strike and you need to accept the same and plan rightly. There could be sickness, job losses, pay cuts and even a pandemic—there can be so much around that will change with the way you handle money. In such times, your EMI still needs to run smoothly. Therefore, you must be prepared with a fund for contingencies for at least five months to sail you through, even if you have a home loan or don’t. Windfalls work Well Whenever you have a windfall gain, go ahead and reinvest the money into paying off part of your loan. This is vital to reduce the interest burden your loan comes with. Additionally, you get to enjoy ease of mind by not having wasted the windfall gain on some purchase you do not actually need. Check out the home loan eligibility well ahead with a home loan online calculator and offers. It might seem tempting to go in for a new buy or a luxury splurge when you have bonus funds. However, if you have a home loan tied up to your name, the cleverer thing to do is bring down the EMI burden. Target Principal Reduction Always target that you try paying off the loan with part payments in lump sums. Bringing down the principal lessens the EMI burden. It might bring down the tenure of your home loan. During the early stage of a home loan, you stand best fitted to pay off the steep principal amount. Partial prepayments are not even subject to interest or penalties. That gives you an additional advantage. You need to plan these pre payments in an orderly manner after you understand the process from your bank. When planning your finances, you need to set up an account for saving up funds for your EMI on the home loan. Your investments and policies on maturity can yield you good returns. You can simply redirect these savings into a specific EMI fund. Even if you do not go in for hurried prepayment, you can save up separately to not mix up your expenses. Check out for dormant accounts or low return policies that are not performing as anticipated. Pull out such funds, investments, and roll these back into your EMI account. You might even go in for shorter plans for investments that are safe. So many instruments around the market have good yields despite being low risk. You can easily tap such sources for investment with any extra money you have. Essentially, over a short span, these arrive back all bagged up with favourable returns. Use these to build an EMI fund. When you know you fulfil all home loan eligibility criteria, get one at the right home loan interest rate without delay. [B-02] Summing Up Make use of home loan calculators and expenses log applications to track how much EMI you can comfortably bear at the most stretched rate. Plan a home loan by checking up plans on home loans online. Once you are aware of your home loan eligibility, calculate an estimated EMI using the relevant home loan eligibility.
Marginal Cost of Fund Based Lending Rate As a home loan borrower, you may wish to get the lowest possible loan interest rates. Paying a high-value home loan is often heavy on the pocket, that too for a long time. Fortunately, a few years back in April 2016, the Reserve Bank of India brought forward certain guidelines under which the housing loan borrowers could benefit from cuts in the interest rates. These guidelines are called MCLR, Marginal Cost of Fund Based Lending Rate. Understanding MCLR In simple words, Marginal Cost of Fund Based Lending Rate, is a home loan offered by banks, lenders, finance companies, but at lowest interest rates. The main aim of this scheme is to ensure that banks can pass on the benefits of cutting the loan rates. It was in 2010, that the base rate system was introduced by the RBI in the year 2010 as a replacement for the Prime Lending rate system. The base rate was the minimum interest rate that was fixed by banks. Below the set benchmark money could not be lent. However, RBI felt that the transmission of interest rates in this system was not very operative and the benefits did not reach the customer. Hence, to bring some positive transformation in the process, in April 2016 the MCLR system was brought about. MCLR in Home Loans MCLR is connected to the repo rate as well as the lender’s fund cost. And whenever there is a change in the repo rate, it would directly affect the floating interest rate on the home loans in India. Therefore, when the lender cuts down the MCLR, there would be a decrease in the floating rate of interest on the home loan. What should be kept in mind is that the decreased rate and MCLR would not affect the EMI that you are to pay, but it would surely have an effect on the tenure of the loan. Calculating MCLR For calculating MCLR the following components are to be kept in mind: Marginal cost of fund Operating expenses Tenure premium Cost of maintaining CRR, Cash Reserve Ratio It is also vital to consider the sources that lend funds to the banks. Most banks generally borrow from savings accounts, current accounts, recurring and fixed deposits etc. to calculate the marginal cost of borrowing, the borrower may refer to the interest rate of the corresponding sources. As per RBI, the following formula can be used to calculate MCLR,MCLR = Marginal borrowing cost x 92% + return on the net worth x 8% Keeping the following points in mind will help in comprehending the different aspects of Marginal Cost of Fund Based Lending Rate, MCLR: Under the guidelines of the RBI, banks must maintain a minimum CRR, cash reserve ratio, of 4%. These deposits do not fetch any interest to the banks Banks can also obtain a certain allowance called Negative Carry on the CRR Banks need to manage the operating costs The own-expenses of the banks such as employees’ salary, cost of raising funds, cost of running the branch office, opening a new branch etc. cannot be billed to the bank customer MCLR housing loans depend on: Tenor premium Marginal costs of funds Bank operating costs Negative carry on CRR [B-02] Summing Up As per financial experts, Marginal Cost of Fund Based Lending Rate, MCLR is a much better option when it comes to interest rate calculations. Every time there is a change in the REPO rate, the consumer can expect a benefit. Thus, giving the home loan borrower a respite in the form of reduced interest rates. However, it should be kept in mind that only the borrowers who have a housing loan on floating rates would be able to avail of this benefit. The fixed rates on home loans in India are not affected by MCLR.
Energy-efficient home design is no longer a trendy concept; considering environmental factors, it has become the new normal. If you are planning to take a home loan or home renovation loan to build or renovate your home, you must consider Energy-efficient Home Design Methods, which have been described in great detail in the following parts of this article. Energy Efficiency – What is it all about? Energy Efficiency refers to the various methods undertaken to save energy and to improve energy productivity, ultimately saving money. Energy-efficient homes are more comfortable to reside in and are more durable in the long term. Are you excited about saving money & energy? Follow the given energy-efficient Home Design Tips for Renovation. 1. Enhanced Building Insulation Insulations seem like a less advanced solution, but they are the most effective when it comes to energy savings. Appropriate insulation lining should be provided, suitable for summers and winters. A good insulation lining helps regulate the temperature of the home, reducing the power consumption of air conditioners in summer and room heaters in winter. 2. Energy-efficient devices-HVAC Systems When renovating, check all your electrical devices for their energy efficiency ratings. If any device is outdated, replace it with efficient devices based on the latest technology, as these devices consume less electricity and emit very little heat. Heating, Ventilation, and Air Conditioning (HVAC) systems form nearly 50% of energy consumption in residential apartments. So, installing an HVAC system with high efficiency would save you energy demand, reducing your monthly electricity bills. 3. Smart Lighting Fixtures Lighting fixtures form a major share of energy consumption. During the renovation, replace all the old incandescent light bulbs with Compact Fluorescent Lamps (CFL) or Light-Emitting Diodes(LEDs) as they have high energy efficiency, longevity, and low heat radiation features. These days, smart lighting fixtures are available that work on sensors and sense the presence of the humans in their proximity, which means they light up when you enter the room and automatically go off when you exit the place. These smart lighting fixtures can be installed on the terrace and at other appropriate places to save energy. 4. Captivating advantages of Solar Power As solar light is abundantly available, you can install solar panels on your rooftop to intercept the solar energy. Rooftop solar systems provide an alternative energy source that is eco-friendly and does not emit any greenhouse gases. It’s just a one-time investment with very minimum maintenance cost but, in return, gives you continuous savings on your energy bills. If you have taken a home loan and are planning to rebuild your house, keep the orientation north-facing so that sunlight enters the house for the maximum amount of time, reducing energy requirements in the daytime. 5. Upgrade Water systems in your home Water requirements are one of the most crucial requirements in your home. While planning renovation activities, strategic planning should be done to upgrade the existing water system. Rooftop rainwater harvesting systems or used water recycling systems can be installed to use water for irrigation and secondary uses. Existing hot water systems should be replaced with efficient heating systems based on new technology or rooftop water heating systems. The point to be noted here is that this saves the cost of excess water supply and a portion of your electricity expenses that could have been used to draw that excess water. Building your dream home demands significant cash flow. You can look forward to available loan options for your finance requirements. You can refer to Piramal Finance (PCHF), which provides dedicated services for housing loans, Home Construction Loans, and Home Renovation Loans. [B-02] In conclusion Energy-efficient practices should be incorporated into daily habits so that energy can be conserved not only for economic gains but also to protect nature and reduce pollution. Some basic steps that can be taken in this regard are checking for sanitary fitting leakages, switching electrical appliances off when not in use, and installing dual-flush toilet systems to conserve water.
Owning a house is a dream ingrained into our ambitions since youth. Even marketing and advertising strategies rely on this tendency to own a roof on your head, deliberately. However, with a large number of urban youth having to migrate to bigger cities in search of jobs or to make a better career, owning a house is one plan that keeps seeing delays. [B-01] A Look into the Dominant Sentiment Thanks to the expense and the expanse involved in buying a house, you might just get confused while deciding if buying a home with a loan is better or if renting is the easier route to take. While each has its own slew of advantages, somewhere down the line the scales tilt in favour of buying a home with the aid of a housing loan or home loan, at the right home loan interest rate. Security and Mental Peace is Vital Social security and emotional peace are the top things you associate with owning a home. True, there remains a liability to repay a home loan or housing loan with interest attached. Even then, the sense of completion you feel in having a home you can call your own is unique. Renting a home gives you shelter and security of living but comes with the non-security of being a permanent place or your place, for that matter. EMIs- No longer a Burden Paying an EMI for a home or housing loan is a long-term process and might even cost you more than an affordable house rent. However, with fluctuating home loan rates and lower loan interest rates due to a dull market, a home loan EMI is much more affordable now than it was a few years back. With the right bank hopping, comparison of rates, and sensible down payment decisions, you can get to a figure that is close to your rent, if not lesser. An Asset in Kitty No matter how much you debate in favour of renting, taking a loan for buying property actually is an investment. A house is an asset, which can help you reap more benefits down the line. In fact, many young buyers rent homes near their work areas and invest in a property in native places to rent out. This gives you an income that helps balance your EMI payment. In the longer run, you can keep renting out your home even post loan closure. This leaves you with an income in hand. Property never goes stale though it might feel cold from time to time. Tap the Tax Benefits All this aside, EMI payments allow you to claim tax benefits. This helps in bringing down your overall tax liability too. The repayment of the principal bit in your home loan is eligible for deduction as per Section 80C. Additionally, interest payment up to INR 2 lakh can be termed as deductible from income. This rule applies to joint loan takers as well. Therefore, both you and your spouse can club up to pitch for a home loan and reap benefits on your individual tax files too! Property Appreciates, never Depreciates This is a fundamental rule of property buying, and that is why buying real estate attracts so many people from all lifestyles. Appreciation benefits and gains are taxed at 20 percent, while a property sees huge appreciation rates. Additionally, a reverse mortgage can be taken to source a few other needs you might have when young and while you have a stable source of income. Paying an EMI needs cautious planning and considerable accountability. This might seem too much responsibility over simply renting a property. The latter surely offers rental benefits as deductions, lower maintenance costs as well as the flexibility of changing homes as per need. However, the benefits of having a home that you call your own and get to design from scratch seem much bigger a benefit in comparison. [B-02] The Way Forward Plan your finances and scale up whenever you need to build a savings bank. Once you are sure of your repayment capacity and get an offer approved from any bank—it is worth risking the purchase of a house. After all, how long would you like to rent?