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DID YOU KNOW YOU CAN ACTUALLY SAVE MONEY WHILE BUYING A HOME? HERE’S HOW
Buying a house, whether it’s your first and only home or your second or third investment, costs a significant amount of money. Real estate is an investment for life, and while going into the deal, chances are you are already mentally prepared to make one of the most significant purchases of your life. Even a nominal investment of Rs 70 lakhs for a 2BHK is a lot of money, but there are a few things you can do to drive down that cost and make a saving – you just need to know ‘how’. That being said, here are a few tips to keep in mind when investing in real estate, to actually help you save a significant amount of money.
Your wife is your greatest asset
Believe it or not, if you’re married, your wife could be your greatest asset when buying your home. “Having a woman co-applicant as the first borrower can bring down the amount of interest you pay. Also, if both the spouses are working and apply for a loan jointly, the total loan amount eligibility increases” explains Navin Chandani, chief business development officer, BankBazaar.com. He goes on to say that, “both the co-applicants can claim tax deductions of up to Rs 1.5 lakhs each, against the principal repaid, under Section 80C. Both can also claim up to Rs 2 lakhs each, against the interest paid, under Section 24b.”
There’s more than just the one bank
Just because you bank with a particular institution, it doesn’t mean you have to take your housing loan through them – regardless of what they offer. Today, almost every major bank offers housing loans, and it costs you nothing to explore your options by conducting due diligence and choosing the bank with the lowest interest rate. As mentioned above, female borrowers usually enjoy lower interest rates as well – usually ranging from 0.01% to 0.15%, so that’s something you might want to consider. It may seem like a small amount, but since home loan tenures are typically in the range of 15-25 years, even a small difference can add up to significant savings. For example, a difference of 0.05% on a Rs 50 lakh loan for 15 years can save you approximately Rs 27,000.
Look for benefits under government schemes
If you’re a first time home buyer, schemes such as the Pradhan Mantri Awas Yojana (PMAY) have been launched, to help citizens avail of homes at subsidised rates. Depending on whether or not you meet certain criteria, under the PMAY Credit-Linked Subsidy Scheme (CLSS), first home buyers can get interest subsidy benefits of up to Rs 2.67 lakhs against the home loan, for buying affordable homes. That adds up to quite a substantial saving.
You don’t need home loan insurance
Many real estate developers will have you believe that home loan insurance is compulsory, but this is not the case. Rahul Grover, CEO of SECCPL says, “when opting for a home loan through a bank, always remember that there is no obligation to purchase an insurance cover at the same time. Neither the law or the RBI or IRDAI have made it mandatory for the same. Purchasing insurance is always at the sole discretion of the buyer and one cannot be forced to buy a plan. One can always purchase insurance at a later stage, through any insurance company.” Keep in mind that if you do take an insurance policy bundled with your home loan, it is likely to be a single premium, and you will not be able to port your insurance if you wish to switch your lender.
Well begun is half done
It is always more expensive to buy and move into a ready property than to invest in one that is just beginning construction. If this is going to be your first investment and you can afford to wait a while before you move in, consider buying a property that is under development. A word of advice though, while purchasing an under-construction home, check the RERA registration and record of the developer. Preferably, choose properties in projects where the developer has taken title insurance.
Are you ready to make your first real estate investment? What advice have you been given? Share your thoughts and start a conversation in the comments below.