More articles for you

Your one stop place for everything related to finance and lending

Know More

Why It Is Important To Keep Reviewing Your Home Loan?

Buying a home comes with a lot of financial burden and responsibilities, which, however, is worth every penny you spend behind your cost niche. Home loans come with low interest rates and a duration that you can choose based on your age and other considerations. However, often a mistake that home buyers make is continuing with the payment of home loan EMI or installment amount without even checking or reviewing the amount remaining for years on end. It is crucial that you do so, not only for the sake of budgeting but also for other important reasons that might benefit your pocket. Read on to learn why you should keep reviewing your home loan occasionally. Foreclosure: Foreclosure is often an option that you might want to consider in the case of a home loan, especially if you have a hefty amount of cash ready with you. Foreclosure helps you close the loan while partial payment brings down the amount, reducing the monthly EMI amount, thus being less burdensome on your pocket. To foreclose or make part payments, you are required to review your home loan to check the amount remaining, the home loan interest rates, the charges, tax benefits, and how much you will be saving ultimately and thereby write the application to the bank putting forth your request. Top up: Financial situations do not remain the same all through, and at times, you may find it difficult to pay for the home loan EMI while meeting other needs. To cater to the increased demand for money, applying for a top-up loan with the bank from which you have taken your home loan is prudent. However, to know whether you are eligible for a top-up loan, you need to review your home loan with the same bank or if any other bank offers a top-up along with a home loan balance transfer. Balance Transfer: The financial market is dynamic and is always changing. The interest rates may change. The interest rates may plummet, but there may be better opportunities for home loan borrowers, special offers, and more. The situation may make you opt for better rates in other banks, wherein you may go for a home loan balance transfer. To do so, you must check your home loan and submit the necessary loan documents, proof of income or financial status, a No Objection Certificate from the bank, and other necessary documents to support the balance transfer. Although there is no specific rule on how often to review your home loan, it is advisable to get a check done yearly to note the market rates and other essentials. When you can get your home loan top-up or home loan balance transfer from reputed financial institutions like PCHF, you can rest assured of a hassle-free procedure. [B-02] Summary Buying a home is a huge financial responsibility, and once you have taken out a home loan, it is imperative to review your loan from time to time. Reviewing the loan has many advantages, such as saving by foreclosure or part payment, transferring the balance to a lesser interest rate option, and meeting expenses during financial crunches through top-up. Top-up and balance transfers from financial institutions like PCHF allow you to get the best rates in the market without any hassle.

08-11-2023

Know More

Different Type Of Loans That Offer Huge Tax Benefits.

Sometimes, you just have to take a loan to make ends meet. But that doesn’t mean you cannot make a saving while doing so. Here are 4 such loans you can make significant tax savings on. [B-01] 1. Home Loans: Much like others on the list, individuals have to take out a home loan in order to meet a basic necessity, shelter. Under section 80C of the IT act, you can avail of tax benefits of upto 1.5 lakhs on your home. Even the interest you pay on the home loan can be claimed through Section 24 of the IT act. In 2015, the government also launched the Pradhan Mantri Awas Yojana that was meant to provide housing for “all” by 2022. If you avail of a housing loan under the Pradhan Mantri Awas Yojana, you are eligible for deductions of upto 1.5 lakhs on the interest paid.It is worth noting that while you cannot claim this tax benefit on any properties that are under construction if you wish to finance the purchase of a second home, a deduction claim of upto 5 lakhs per year can be made (contingent on you not selling the house for 5 years from the possession date). If you are a first-time homeowner, additional benefits upto 50,000 can be claimed under section 80EE. 2. Personal Loan: A personal loan oftentimes referred to as a professional loan for those who are self-employed, is another way you can make some significant tax savings. The key to making tax savings on a personal loan/professional loan depends on where you are going to spend it. In other words, while there is no tax benefit for taking out a personal loan, if you were to use the personal loan to buy a house you could gain tax benefits under section 24 of the IT act, or if it were to fund your education, under Section 80E. 3. Car Loan: Owning a car is seen as a marker of independence and prosperity and many choose to take out a loan to purchase one. If you are self-employed, you can get tax benefits on the interest you pay for your car loan under section 43B of the IT act. It is worth noting however that you can only claim tax benefits on the interest payments you have to make, and not on the routine EMI payments. For instance, if you have an annual income of 15 lakhs and your interest payments on the car loan is 50,000, then only 14.5 lakhs of your income is taxable. 4. Education Loan: For many Indians, studying in a foreign university is a dream. For others, just attending a University is enough. Regardless, funding one’s education can be expensive and students often have to take out a loan. As education is a fundamental right, tax benefits have been made available for those who take out education loans, incentivizing more people to fund their education.If you take out a loan for higher education, the interest payments you make on this loan can be claimed for deductions under Section 80E of the IT act. This facility is available from the time you begin making interest payments, and upto 7 years from this date (or until you repay the loan in full). If you take out a loan to attend a foreign university, you are eligible for a further benefit from the lower TCS (Tax Collected at Source).Additionally, you can also claim upto 1.5 lakhs under section 80C on tuition fees paid, and this a separate deduction altogether which can be made in tandem with section 80E. For an education loan, tax benefits are limited to a maximum of 8 years. [B-02] Conclusion Home loans have always been a popular means of financing the purchase of a house, still seen as a symbol of safety and prosperity. Owning a home is a dream for most, and you could consider the home loan offerings available on the Piramal Finance to take your next step towards being a homeowner. However, home loans (loans of any kind) can be difficult to mandate, and in order to help mitigate some of this downside, however, the Income Tax Act has a number of provisions to provide citizens with relief in the form of tax benefits and deductions on loans that are taken out to purchase necessary goods and services.

08-11-2023

Know More

What Is CIBIL Score And Its Importance?

Your CIBIL score becomes a decisive factor when applying for a credit card or a loan. So, let us know more about CIBIL scores and their importance. What is the CIBIL score? CIBIL score or credit score is a number that represents a borrower’s creditworthiness. Creditworthiness refers to a borrower’s ability to pay back the borrowed money. Credit bureaus determine credit scores after considering several factors, including repayment history, credit utilization ratio, and credit history.The Credit Information Bureau (India) Limited (CIBIL) is the most popular in India. Hence, a credit score is synonymous with the CIBIL score here. CIBIL score is a three-digit number that ranges from 300 to 900. Needless to mention, the higher the CIBIL score, the better it is. [B-02] Importance of CIBIL Score Now that you know what the CIBIL score is, here is how it plays an important role. 1. Role in loan approvals: CIBIL scores play an important role in loan approvals. Before approving a loan to a borrower, lenders look at the borrower’s CIBIL score. This CIBIL score is a good measure for judging a potential borrower. If they have a good CIBIL score, it indicates that they have handled their previous debts responsibly. On the other hand, a low CIBIL score is an implication that the borrower has handled their previous debt badly. Therefore, having a high CIBIL score can help you get loan approval. 2. Access to higher loan amounts: It is not just loan approvals; one’s CIBIL score determines the loan amount. If you have a good CIBIL score, the lender feels confident you can repay their loan. Thus, you will be eligible for higher loan amounts. 3. Credit card eligibility: With every credit card application that banks and financial institutions approve, a huge amount of risk is involved. Therefore, credit card issuers have some eligibility criteria for the applicants. The applicant’s CIBIL score is one of the main ones. With a good CIBIL score, you will be eligible for some of the best credit cards in the country. 4. Higher credit limits and lower rates of interest: You might be eligible for higher credit limits if you improve your credit limit while having an existing credit card. With higher credit limits, the interest rate of your credit card can also go down. 5. Buy products on EMI: Sometimes, buying a phone or a laptop on EMI has its perks. However, eligibility for EMI purchases often depends on your CIBIL score. Once again, having a high CIBIL score helps. Improve your CIBIL score By now, it must be evident how important CIBIL scores become in different aspects. Hence, it might affect you if you don’t have a credit profile or a low CIBIL score. But there are some ways you can boost your CIBIL score. 1. Pay your dues on time: One of the best ways to build up a good CIBIL score is to pay all your dues on time. This includes EMIs of personal loans, home loans, and credit card dues. 2. Don’t be a defaulter: Failing to repay a loan or credit card dues can make you a defaulter. This would significantly bring your CIBIL score down. Hence, make sure to pay off all your existing debts and credit card dues. 3. Low credit utilization ratio: Your CIBIL score also gets hampered if you use your credit irresponsibly. People with a high credit utilization ratio are usually thought to be heavily dependent on credit. Hence, they are considered less eligible for more credit, and their CIBIL score decreases. Your credit utilization ratio is the percentage of the total available credit you use. Keeping this ratio to 30% and using your credit wisely can help you improve your CIBIL score. 4. Don’t have too many debts: Too many debts can also lower your CIBIL score. If you keep closing off your existing debts, your CIBIL score will automatically increase.

08-11-2023

Other

Best Intraday Trading Tips You Should Know

Intraday stock trading is one of the riskiest yet most lucrative stock trading strategies. Day trading, also known as intraday trading, is the buying and selling of equities within a single trading session. Essentially, you buy intraday stocks daily, hunt for a fair price to sell them for, and then take the profit. Share values are constantly changing throughout the share market today. Intraday traders’ sole purpose is to profit from these price fluctuations. They purchase and sell various types of stocks after making calculated moves on the same day within trading hours, i.e., from 9:00 a.m. IST to 3:30 p.m. IST. Since everything is done on the same day, it is known as intraday stock trading. Your broker will decide on your position in the market. Whether a person is an expert trader or a newcomer, this type of trading is always advantageous but comes with a lot of market risk. So, it’s better to understand the subject as much as possible, including all kinds of current market indications and trends, which would help you make better choices. [B-01] Delivery trading versus intraday trading Contrary to intraday trading, delivery trading is used when you buy a share but don’t sell it on the same trading day. The equities purchased through delivery trading are credited to your Demat account. You can keep it for as long as you wish before selling it—days, months, or even years. Thus, you remain the owner of these stocks. Investors in delivery trading look for gains by tracking the stocks’ long-term price movement. Pros of intraday trading The trader can benefit from the changes in the market price of the equities. The merchant can avoid delivery fees. If the trading platform is set to do so, the position is squared off automatically if the trader does not close the deal. Cons of intraday trading The trader won’t be the owner of the shares he transacted that day. If the closing rate is unfavourable, the trader suffers a loss. He could have to give up profits if the market is adverse. Best Tips You Should Follow For Intraday Stocks Trading Here are some basic tips for intraday trading that you can use to make money on the stock market. Select the right stocks: Choosing the right portfolio to buy should be your main goal when starting intraday stocks for today. Not all stocks are suitable for intraday trading. Since you would be buying and selling stocks during a trading session, you would need to choose ones with high levels of liquidity. Buying and selling will be easier as a result of this. Before purchasing the stocks, carefully evaluate them. Remember to set a stop loss: When trading shares, investors should always select a stop-loss limit. Following a downturn, the share price can occasionally rise to a high level. Setting a stop loss limit will automatically cause their shares to be sold off before a downturn. As a result, it will stop investors from losing money. Investors should not get too confident when a stock hits a record high during an intraday trading session and expect it to climb more since the possibility of a decline is high. Therefore, investors should exit the stock after the target is reached and it records profits at an acceptable level. Establish entry and exit price goals: Even if it means missing out on the opportunity to purchase the stock, set a price at which you would want to buy it and adhere to it. Set a target price at which you’d like to sell the stock similarly, even if doing so means you could miss out on any potential future profits. The stock market is highly unpredictable. Most theories about the stock market are based on basic research and technical analysis. Some investors make losses because these studies are just indicative and not concrete. Therefore, when an investor thinks that the price of the stock could increase but is actually in constant decline, the investor should choose to sell the shares to avoid any substantial loss. Investors in intraday stock markets should manage their funds carefully since they risk investing more funds to make significant gains. If the market is bad, the investors may lose all their invested money. Always follow the fashion: When there is a significant market trend, stock purchases are advised. And if it’s bad, shorting stocks makes sense. A contrarian market outlook is never a good idea because it can backfire. For example, when the market is bullish, many people sell equities short in the hope that the price will reverse. Such reversals are infrequent. Intraday Trading Tips for Beginners Several charts are available to show how the share has performed, including bar charts, graph charts, candlestick charts, and 5- and 15-minute charts. These enable investors to gauge a share’s performance and trade based on it. Consider setting a stop-loss limit to prevent yourself from suffering a significant loss. Never hurry a trading session; thoroughly analyze the intraday stocks before investing. Pick the best references while evaluating the share market today. [B-02] Conclusion Use these intraday stock trading tips to help you become a better trader and make the most of your next trading sessions. Intraday trading involves a significant commitment of time to analyze, research, and review the performances. Even though intraday trading is riskier than normal trading, it may be one of the most rewarding tactics if done correctly. If you need help with finances, you can always take the help of a financial expert like Piramal Finance. They will suggest which trading options and stocks are best for you and help take care of your personal loan requirements, if any.

08-11-2023

How To?

What Is Property Tax? How To Calculate It?

What is Property Tax? When you buy a piece of property, you are often required to pay a number of taxes over and above the cost of the property when you make the purchase. Of these, Property tax or House tax is a tax levied on a property and is a percentage of the value of the property. Generally, there are three main types of methods that are employed to calculate property tax. The Rateable Value System (RVS), the Unit Area Value System (UAS) and the Capital Value System(CVS). Property tax rates are usually decided on a city-wide basis by the local municipal authority. In Mumbai for instance, the MCGM is responsible for setting property tax rates. In this article, let’s take a look at the various methods which are employed to calculate property tax rates. With this, you can look up the method employed in your city and carry out the calculation yourself so that you are sure of the exact amount you owe. [B-01] Types of Property Taxes 1. Annual Rental Value System/Rateable Value System(RVS): Under the Annual Rental Value System, the home loan tax calculator you would employ would first account for the gross annual rent of the property which is decided by the municipal body of that city. Various factors such as the condition of the property, amenities provided and distance to key landmarks can factor into this price estimate. Here is how the calculation would be calculated for property in Chennai. Rental Value of the property (Monthly) = Basic Rate/sq feet * Plinth AreaAnnual Rental Value = (Monthly Rental Value *12) – 10%.Based on this rental value the property tax will then be applied under the Annual Rental Value System. 2. Unit Area Value System (UAS): Under the Unit Area Value System or UAS, property tax accounting for stamp duty is calculated based on the per square foot price of the built-up area of the property. This square foot per month value is decided by the local authorities after factors such as expected returns, location, price of the land, occupation of the property.The following formula (or variations of it ) are likely to be applied in cities like Bangalore, Hyderabad, Kolkata and New Delhi.Annual Value = Unit Area Value * Covered Area * Use Value* Age Value* Structure Value* Occupancy Value 3. Capital Value System (CVS): In order to calculate property tax based on the Capital Value System or CVS, the stamp duty of the property has to be accounted for. In this system, once the stamp duty of the property has been set, which is usually carried out by the local authorities, the property tax for a loan against property, for instance, is calculated based on this value.Mumbai follows the CVS System, and the property tax based on the stamp duty is decided by the MCGM, the local municipal corporation. The calculation is carried out in the following manner. There are a number of variables that factor into the stamp duty and subsequent tax rate of the property such as the type of the property, what amenities are provided, the age of the property and the location, among others.The tax is then calculated based on the following formula :Property Tax = Tax Rate * Capital value.The rate, issued by the government based on the value of the stamp duty is revised on an annual basis. Conclusion. Buying your first home, making your first property investment or even taking a loan against your property can be an exciting prospect, though you should ensure you account for the property tax in order to avoid rude surprises later on. If you are looking for a home loan, a number of options are available on the Piramal Finance website. If you wish to apply for a home loan or take a loan against property you own on the Piramal Finance Website, you can follow these steps. [B-02] How to apply for a home on the Piramal Finance website. Navigate to the ‘Home Loan’ Section on the Piramal Finance website. Click the ‘Quick Apply’ button. Proceed to complete the form Upon submitting the form, you will be contacted by a representative with assistance shortly. To learn more about such types of topics, visit Piramal Finance.

08-11-2023

Know More

Missed Your EMI? Here is What You Need To Do Next.

Defaulting your home loan EMI payment can be a distressing experience and often out of your hands. Here are some things you could do if you have defaulted on your home loan EMI payment to minimize the damage and prevent missed payments in the future. Types of Defaults on EMI Payments If you default on your home loan EMI payment, your action is slotted into one of two bands, based on the severity. Let’s take a look. 1. Minor Defaults: Since banks do not want to sour relationships with customers over one or two missed EMI payments, they slot customers who have made their previous payment within the last 3 months (90 days) into the ‘minor defaults’ category. This is a minor default if you made your EMI payment in January but missed February. 2. Major Defaults: As you would have come to assume by now, the ‘major default’ badge is given to those customers who have missed payments for the last three months or more. For instance, if your last EMI payment was three, four or more months before the month in question, this is a minor default. The Consequences The consequences could vary based on your relationship with the bank. They might settle for a lesser punishment if you have a good home loan track record and have missed only one or two payments. However, if the bank views you as a liability, the consequences for defaulting on your home loan EMI could be more severe. 1. Negative Effect on your Credit Score Defaulting on your home loan or home loan EMI payment can negatively impact your credit score (CIBIL score), as your credibility towards loan repayment reduces. Using a home loan EMI calculator to plan your home loan EMI payments is best. 2. Fines and Penalties. Banks will want to disincentivize borrowers from repaying their loans, resulting in penalties you might have to pay if you miss your home loan EMI payment. Generally, this penalty is about 1-2% of the EMI, though it can accrue quickly if you miss multiple payments. 3. Recovery and Legal action. Often considered a last resort, a lender might have to take legal action or send a recovery agent to retrieve the funds you owe, which can be a highly stressful experience. Here’s what to do next If you miss your home loan EMI payment, you will likely face the consequences. However, you can take action to ensure you do not default again, thus minimizing the penalties and negative impact on your credit score. Here are some things you can do. 1. Reduce your EMI payments If you cannot meet your home loan EMI payments, revisit the home loan eligibility calculator. Your bank requests that the EMI be reduced by extending the loan tenure or converting the loan into a secured loan by putting up collateral. 2. Part Payments If you have surplus resources, you could make part payments towards your home loan and pay off a bigger percentage to have more leeway. 3. EMI-Free Periods If you find yourself in the worst-case scenario where your income has been affected for an extended period, then you could also request your bank for an EMI-free period. Often granted by banks to customers with temporary unemployment, this allows EMI payments to be paused (usually for 3-6 months) to provide relief. [B-02] Conclusion Applying for a home loan can be tricky, as you have to account for your income in the future as well. If you are looking for a home loan, you can browse the various options on the Piramal Finance website, follow this simple sign-up process, and get loans up to 5 crores, with flexible repayment options.

08-11-2023

Know More

How Home Loan Eligiblity Is Calculated On Your Salary?

For credit companies, the primary driver of profit is their lending activities. These include the provision of issuance of home loans, personal loans, or any other type of loan. One may assume that more loans would then mean more profit. However, this is only partly correct. A lender can only make a profit if the borrower can repay the loan, including the interest component. Thus, credit companies have developed stringent guidelines to assess whether a borrower will likely repay the loan. An example is the guidelines you may encounter if you’re trying to determine your home loan eligibility. A home loan often spans over a decade, and a lender needs a basis to ascertain what amount you can repay. One of the most efficient ways lenders come up with to assess this is through your salary. For a home loan or any other loan, the basic premise is that the more you earn, the more you can borrow because the more you will potentially be able to repay. Let’s, however, take a look at how this calculation is carried out so that you can carry out your calculations with or without a home loan eligibility calculator. How home loan Eligibility is calculated You are borrowing money from a lender as part of a home loan. The risk that the lender is exposed to varies based on each borrower. To streamline the determination of a borrower’s eligibility for a home loan, some common base parameters have been set across lenders, regardless of the home loan amount, repayment tenure, or home loan interest rates. Let’s take a look at some of these criteria. Age: To get a home loan, the borrower has to be between the minimum age of 23 and a maximum of 62 years of age. Credit Score: Your credit score is essential to ascertaining your repayment credibility, and much emphasis is placed upon it. Therefore, your credit score has to be a minimum of 750 or above. Salary: To get a home loan, you must earn a minimum of Rs 25,000 per month. Experience: It is also mandated that an individual have about two years of work experience before they can apply for a home loan. Loan-to-Value (LTV)Ratio: Up to 90%. This refers to the percentage of the property value the lender can lend to the borrower. These are minimum home loan eligibility criteria that have to be met. Over and above this, however, specific lenders might have specific parameters you might have to meet, which can be either more stringent or lenient. However, none of these parameters superseded your income level. You are restricted to certain loan amounts and interest rates based on your salary. Typically, you will be eligible for a home loan whose EMIs do not exceed 40 – 50% of your net monthly income. A Home Loan Eligibility Calculator Knowing how your home loan is calculated is undoubtedly beneficial so you do not end up paying extra. However, carrying this process out manually to account for your salary can be time-consuming and taxing. To save time, you could use a home loan eligibility calculator to make your assessments. However, ensure that you are not relying solely on the calculator and understand the specific requirements of your chosen lender. [B-02] Conclusion Taking out a home loan can be a daunting task. You also do not want to overextend yourself as you have to be sure about your income for the loan period to ensure you do not miss payments, and if you want a larger loan, you might have to look for a higher salary as well. Understanding how home loan rates are calculated, and home loan eligibility ascertained based on your salary is important in accurately gauging your repayment capacity, ensuring you take a loan that is comfortable to repay and does not cause you any trouble. If you want a home loan, the Piramal Finance website has several offerings for all income bands, meaning you are likely to find a loan for you regardless of what salary you earn (as long as you meet the minimum requirement). Here’s how you can apply.

08-11-2023

Know More

Why Filing an ITR is Important to Avail a Home Loan?

In the 1990s and early 2000s, buying a house was considered a necessity. Given the relationship between the average income rates people were earning and the home prices being offered to them at the time, it was not uncommon (quite the contrary) for an individual to be able to purchase a house for themselves using a year or two's worth of salary. Buying a house and starting a family was a fairly simple affair. With property rates skyrocketing the last two decades, however, it has become a distant dream for many to be able to purchase a house for themselves right out the gates, with many spending their entire careers pooling together and saving enough funds to meet the price of a simple one or two BHK (sometimes smaller) in a tier-one metro city, with tier two and three locales quickly catching up. As a result, individuals began looking for the best home loans, as it was the only way they could own a house. However, given the disparity between income rates and property prices, people oftentimes require decades to repay the loan, and banks need to ensure that they are confident you can repay the loan, resulting in several terms and documents required for a home loan. One such condition is that you have to file your income tax returns (ITR) to get a home loan and any subsequent home loan tax benefit. But why? Let’s find out! What does ITR refer to? ITR or Income Tax Return is essentially a form you have to fill that depicts the amount you earned in that year, the subsequent tax bracket you fall into, and, therefore, the amount of income tax you have to pay. Generally, 7 such Income Tax forms and bands are provided by the Income Tax Department. ITR Band Conditions ITR 1 For those earning 50 lakhs or less ITR 2 For those with income other than from “Profits and Gains from Business or Profession,” including income from capital gains, foreign assets/income, and other sources like legal gambling. ITR 3 For those earning 50 lakhs or more, including capital gains, rent, company profits, etc. ITR 4 For those earning ITR 1 + 50 lakhs additional income. ITR 5 For LLPs, associations, firms, etc ITR 6 For companies not claiming exemptions under Section 11 of the IT act ITR 7 For entities that fall under Section 139 (4A), (4B), (4C), (4D). Why do you have to file your ITR to get a home loan? Put, your ITR documents provide proof of your income, allowing banks to assess their risk and set interest rates accordingly. Let’s dive deeper for a better understanding so you can complete the procedure without a hitch and get the best home loans and the additional tax benefit! Some details include Your ITR should show that you have a stable income. This way, banks can rest assured that they have the capacity to repay the loan, allowing for potentially better interest rates. Income statements for the last three years are required as part of the ITR. If your ITR has not been filed, you could miss out on the best home loans and invite legal action from authorities. You will often be requested to provide a ‘net worth statement’ along with your ITR; if you own a business, audited financials will also be required. [B-02] Conclusion Filing your ITR is the first and foremost step in ensuring you are eligible for a home loan. Not only is it mandatory by law, but it also allows lenders to assess your repayment capacity. Providing all the right ITR documents will communicate to the lender that you are confident in your ability to repay. If you wish to apply for a home loan, you can choose from the multitude of options available on the Piramal Finance website. Here’s how you can apply.

08-11-2023

Know More

How To Choose The Right Tenure For Your Home Loan?

A house is one of the most pricey purchases in life. Though having your own house is still a big deal, long gone are the days when people slogged and saved all their lives and then bought a house. Thanks to the easy availability of home loans, buying a house is now a much more attainable dream. You can borrow a home loan from a bank or a financial firm like Piramal Finance. Different home loan types are available for you to choose from based on your requirements. However, the real twist is deciding the right home loan tenure. Tenure refers to the number of years in which you would have to return the loan amount to the institution in the form of EMIs. [B-01] Factors to Consider When Choosing the Right Tenure For Your Home Loan Choosing the right tenure for your home loan can be confusing. To help you out, here are the top three factors that you should consider: Age of the borrower Overall interest rate Your income For How Long Should You Take a Home Loan? After considering the factors mentioned above, let’s understand through an example. So, suppose you are a 30-year-old male borrower with an income of INR 1 lakh per month, and you are looking forward to getting a home loan of INR 20 lakh. So, let us see how your chosen tenure will affect the EMIs you will have to pay. Loan Amount Rate of Interest Tenure Monthly EMI 20 lakhs 11% 10 years INR 27,550 20 lakhs 11% 15 years INR 22,732 20 lakhs 11% 20 years INR 20,644 20 lakhs 11% 25 years INR 19,602 20 lakhs 11% 30 years INR 19,046 5 Tips to Reduce Rate Other than the loan tenure, other aspects can help you get the best possible deal when planning to take a home loan. Let us take a look at some golden rules that you must keep in mind: Make frequent prepayments Research Choose the shortest possible tenure Higher Down Payment Increase EMIs when possible [B-02] What is the Best Home Loan Tenure? Sadly, there is no perfect answer to this question. For different individuals, there could be different suitable tenures. Therefore, the tenure you choose has to suit your requirements the most. However, you must remember that the home loan interest rate or the EMI does not affect other life expenses too much. As discussed above, if you can pay higher EMIs, you can choose a shorter tenure, but if you are looking for affordable EMIs, you can opt for a longer tenure. Use a home loan EMI calculator to clearly understand the interest rate and EMIs.

08-11-2023