Acquiring a house of your dreams is therefore essential. Though, it requires huge finances and not easily achievable for middle - class person, you can still make the dream possible with help of a housing loan. You must be wondering that financial experts advise you to stay away from loans, why are we advocating a loan here.
Home loan offers you a chance to buy an asset bit by bit simultaneously offering a tax benefit. You will be eligible to claim both your principal and interest, which you repay towards your housing loan during the year.
Here are a few tips, which you can use to plan your loan in the best possible way:
1) Rather than paying a huge amount every month as rent, you can opt for a housing loan, and acquire a house for yourself. The EMI will replace the rent. Here, with every installment paid by you for the ownership on your house.
2) Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 150,000 or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house).
Principal can be claimed up to the maximum of Rs. 100,000 under Section 80C. This is subject to the maximum level of Rs 100,000 across all 80C investments.
3) If your spouse is working, both of you can opt for a joint home loan. Both of you, in this case will be able to claim separate deductions in your income tax returns.
The maximum limit of INR 1, 50, 000 for interest and INR 1, 00, 000 for principal will be applicable individually to both the borrowers.
Tax benefits can be doubled by availing a joint housing loan.
4) Every time you have surplus amount you have to make sure you repay some part of your loan (After maintaining your emergency fund of course!).
This will reduce your interest burden largely.
5) Last but not the least - go for it only if you can afford to. The first criterion of opting for a housing loan is to ensure that you can pay EMI every month easily. Don't go for it based on future incomes. It'll ruin your peace otherwise.
Housing loan is a very effective tool to create an invaluable asset. However, plan it wisely to get the maximum out of it J
About the Author:
Sapna Tiwari is a CERTIFIED FINANCIAL PLANNER and masters in Financial Management with over half a decade's experience in the field of personal finance. The views expressed are personal. She can be reached at firstname.lastname@example.org