This article came in news paper Times Property dated 17-12-2010
Today, home loans are available for many needs of homebuyers. With the keen competition among lenders, more innovative schemes can be expected, says V Nagarajan
The home buying exercise has never been as flexible as it is now thanks to a plethora of home loan options, quick processing, instant approvals and faster disbursements. That is not all. The fierce competition among various housing finance companies and banks has brought in its wake transparency, bargain deals and festival offers to enable borrowers strike bargain deals. There is no dearth of festivals in India and each festival brings discount offers in one form or the other to lure home loan borrowers.
Loans are available not only for salaried but self-employed, agriculturists and businessmen. The new entrants to the home loan industry are keen to remain flexible, especially among self-employed and businessmen, when the latter is also not reluctant to pay a higher lending rate. Home loans are available to buy under-construction or ready built units, furnish existing homes, and build additional floors on an existing home. There are loans available to buy developed plots and then construct a house. Plot loans are also available to bid for units offered by State housing boards.
With an increase in family size, the requirement for a larger sized house is felt and there are institutions that assist homeowners in looking for a new home while simultaneously working on the resale of the existing one. Today, there are institutions which assist sellers in getting a better deal for their properties through a property services division.
If both a husband and wife are employed, the joint income enables them to seek a higher loan and both are eligible for the tax sops while investing in property. Tax experts advise that even if one has savings, it is advisable to seek a home loan while investing in property due to the sops associated with the home buying exercise through home loans.
Loans up to Rs 20 lakhs are treated as priority sector. There is an interest concession of half percent for those seeking loans below Rs 10 lakhs and houses whose value does not exceed Rs 20 lakhs.
Home loans are also available to buy additional homes to rent out and earn rental income. The government offers tax sops for those who are keen on investing in housing primarily to boost the rental housing stock. Residential property leased for a minimum of 300 days in a calendar year is exempt from wealth tax. So, a home loan comes in handy to acquire an additional house.
Home loans are available even for senior citizens who can show recurring income even after retirement. There are institutions that consider offering home loans even after the retirement age and so there is no age restriction on going in for a home loan.
NRIs are invariably faced with a dilemma as to what would happen when they avail a home loan during their sojourn abroad and thereafter are compelled to return home during the home loan repayment period. Housing finance institutions are flexible in that they reschedule the loan repayment period depending on their qualification, family size, savings, re-employment potential and other incomes in India.
It makes better sense to seek a home loan while investing in property. Home loan borrowers can avail of top-up loans offered by several institutions to tide over contingencies. Similarly, mortgage loans go a long way in raising that much-needed capital for any exigencies. Those who have let-out their residential or commercial properties to corporates or public limited companies can get the rentals for the unexpired period of the lease upfront and plough back the money to more profitable avenues.
Those who are aspiring for higher education abroad can use property as a security while seeking an education loan. This is irrespective of the fact whether there is an existing home loan liability attached to the property.
Gone are the days when a self-employed or budding entrepreneur had to accumulate savings to commence his operation in his own premises. Today, he could own commercial premises by seeking specific loans and commence his business instantly. Loans are also available for upgrading existing office premises or extension of the premises.
Even during later years, the asset acquired through a home loan comes in handy to meet any contingencies. This is because reverse mortgage allows senior citizens to remain in the house and also retain their ownership. The money they get from reverse mortgage can be used for anything like meeting day-to-day expenses, home improvements or for healthcare. In a reverse mortgage, the borrower can choose to receive the money in one lump sum or by way of monthly, quarterly, or annual payments.
BYTES A WORKING COUPLE CAN SEEK A HIGHER LOAN IF THEY APPLY AS CO-BORROWERS
PROPERTY CAN BE USED AS SECURITY FOR AN EDUCATION LOAN