The entire journey of purchasing a home and getting it financed can be a very daunting task. However, the very first question that comes into mind while planning to purchase a home is “are home loans affordable?” There are a few other related queries that follow:
- How much down-payment is required?
- Given my current income, how much the loan would I get?
- What is the maximum cost to buy a house?
The affordability of a home loan is pivotal to your decision of going through the entire process. So, can a home loan be considered in the affordable category? Is it that easy to just apply for a home loan and buy a house of dreams? In this article, we will discuss the various factors that actually make a home loan very affordable.
To assess the affordability of home loans, let’s understand the maths behind it.
Banks and financial institutions generally issue loans to an extent that EMIs don’t exceed 40-45 percent of your net salary. Also, the home loan amount that you can avail will depend on different loan tenures. Following are some of the examples of the loan amounts that can be availed at an interest rate of 8.5%:
∙ 30-year loan: Rs 52-53 lakh
∙ 25-year loan: Rs 49-50 lakh
∙ 20-year loan: Rs 46-47 lakh
∙ 15-year loan: Rs 40-41 lakh
The various features which make home loans one the most affordable loans are:
Low-Interest Rates
Home loan interest rates are highly subsidized and one of the lowest compared to the other categories of loans. Housing Finance companies like PNB Housing Finance do provide highly excellent offers on their home loan products.
Customer Care Service
The excellent customer care services including “Doorstep Service with a dedicated relationship manager” are some of the biggest highlights of this industry. Due to these services, the tedious process of filing the documentation becomes a hassle-free experience.
Complete Legal Evaluation
The banks and housing finance companies, these days, are now going a step ahead and provides you with a complete legal evaluation of your new property. This will give you peace of mind.
Policies
The biggest factor in the home loan being affordable is its prominence in all the policies and schemes of the government for the welfare of the people belonging to the middle-income group. Under schemes like Pradhan Mantri Awas Yojana Scheme, extra subsidies are provided on the interest rates to make the houses more affordable for these people.
Tax Benefits on Home Loans
As per the laws set by the Income Tax Department, an individual can claim interest paid on housing loan as a deduction from gross total income. The amount of interest which can be claimed as the deduction is currently capped at Rs 3.5 lakh for the above category(those buying houses under an affordable housing scheme).
Hence home loans have some inherent characteristics and economic dynamics which make them one of the most affordable loan categories that are available. Do your research first and choose the right home loan to finance the house of your dreams.
