Tax Planning On Loans

 

taxsavingtips_loanyantraMake some great tax deals on your loans!

Yes, Tax planning month is here. Take the expert advice for tax planning before you pay the late fees. 

Let us dive in for the perks when you are in different loans.

Tax Planning On Home Loans

Owning a home is a coveted dream. However, the ever-rising real estate prices make it difficult for many to buy a home, or even a piece of land, with just his/her savings. Home loans are meant for bridging this gap. Home loans come with a lot of fringe benefits in the form of tax breaks.

How do you benefit?

Anyone with home loan can avail tax benefits in two ways. The amount paid towards the principal repayment qualifies for deduction from income under Section 80C of Income Tax Act.

Another benefit comes in the form of deduction for the amount paid as interest on the home loan. The maximum amount you can claim as interest deduction from your income for a self occupied property is Rs 2 lakhs.

If you buy more than one property, only one house can be counted as a self-occupied property, and the others are deemed to be let out (even if they are not let out).

In case the loan is jointly availed between you and your spouse, the deduction of Rs 2 lakhs can be claimed by both of you.

taxplanning_loanyantraIn case of properties that are deemed to be let out or are actually let out, the entire amount (no ceiling of 2lakhs here) paid as interest is admissible as deduction under Section 24B of IT Act, while the rent received gets added to your income. In spite of that, it turns out to be a good bargain.

Tax payable Tax payable when availing home loan Tax payable when availing two home loans
Total income 8,00,000 8,00,000 8,00,000
Rent income Nil Nil     80,000
Deduction under Section 80 C 50,000 50,000 50,000
Principal amt deductible under Section 80 C Nil 15,000 15,000
Deduction under Sec 24B (Interest)    Nil   1,05,000   2,10,000
Total income on which tax  is payable 7,50,000   6,30,000   6,05,000
Tax paid   75,000      51,000       46,000

Tax Planning on Educational Loans

Education loans pave the way to your future.  Education loans could be availed for studying in India or abroad. But to get tax benefits from an education loan, the loan should be availed from any scheduled bank or notified financial institution.

Education loans can also be availed for self, spouse or children.  The legal guardian of any student can also avail this loan. Hence parents or spouses can also claim deduction for payment of interest.

How do you benefit?

Section 80E of Income Tax Act offers tax benefit for those availing educational loans for higher education.

However, as against home loan, only interest paid towards the repayment of loan earns deduction and not the principal. Also, there is no upper limit fixed for interest repayment. 

Tax benefit can be availed for a maximum of 8 years or on the loan repayment term, whichever is applicable. For example, if the entire loan is repaid in 6 years, then the tax benefit is also limited to that term.

Tax Planning On Car Loans

Not many know that car loans come with tax advantages. However, all car loans do not come with tax benefit. A car loan is a good tool for the self-employed to claim some tax deduction. If used right, offsets the interest paid over a depreciating asset.

How do you benefit?

Deductions from payable tax through a car loan can be availed only if you are a business man and declare the profit or capital gains earned from your business.

Another condition attached to this is that the vehicle has to be purchased in the name of your business. In that case, you get exemption on the interest as well as depreciation of the vehicle.

Under these conditions, you can include the interest paid for your car loan for tax exemption.

Besides this, businessmen can avail deductions on personal loans too under certain conditions, like the loan being taken as a business loan or for capital investment in business.

Loans taken wisely and within our limits would save us from a never ending debt spiral, which many fear. While loans affect your monthly as well as annual finances for other expenditures, the beneficial side of it in the form of tax saving, reduces their overall impact considerably.

 

 

 

 

On what basis home loan is given in India?

Home Loan depends on following factors

  1. Your Salary or Your Business turnover
  2. Your age
  3. Your Existing Loans
  4. Your Credit Score.
  5. Last but not the least the Property you are buying & Own contribution to pay 20% of the property
  6. Location , approvals of the property.

Your Salary : You should be earning enough to pay the 80 lac EMI.

Your Age : Based on your age, maximum Loan tenure will be decided. Before you retire i.e 58 years you should be clearing the loan.

Existing Loans : If you have any exiting Loans, you will be paying EMI so you overall eligibility would come down for the next loan.

Credit Score : Banks/NBFC would look at your credit report and based on how you have paid will decide to go if they want to give you loan

Property : When you are asking for Rs 80 lac loan, it would mean at least the property should be Rs 1 crore. Technically the price of the property should support it and you have to pay 20% from your self funding and 80% you can take loan. It should not be like for Rs 10 Lac property you are paying Rs 1 Crore.

Approvals of the property : Based on the Location and type of approvals and amount of deviation while constructing banks would take a call if they will be giving loan or not.

So based on the property you have selected and based on your financial profile you need to select the bank and the loan product. Some not so famous banks will have better products for certain properties.

Plan your loan well, so that you will close faster and home will be fully yours.

If you are looking for Home Loans and want right home loan fit for you and to plan it well to close fast then apply on LoanYantra | Get Home Loan Online .

If you already have existing home loans then to plan it well and close faster, then manage the loan on Loanyantra for free Home Loan Management Company India: LOANYANTRA

What will happen if the rate of interest on home loans decreases?

It would based on what you have fill while applying your loan.

They are two possibilities, when rate of interest on home loan decreased.

  • Option 1: Fluctuating EMI
    • Here your EMI will be reduced.
  • Option 2. Fluctuating Tenure
    • Here your Tenure will be reduced.

Let me explain which one is advantage of the both .

First, when you have applied for a loan with the floating rate of Interest, you have to opt what is the change you like to have from above two options.

By default most of the banks the Option 2 is by default, i.e tenure would decrease if the rate comes down and tenure would increase if rate goes up.

Which one is better ?

If you have opted for Option 1, that EMI should change then your tenure gets fixed and when rate comes down your EMI will reduce and when rate goes high your EMI would increase. So if you are contributing maximum of your salary towards EMI then be cautious about it. It can hurt other financials.

When the rates are downward trend the keeping the EMI constant would reduce your tenure drastically. For example, for a Rs 50 lac loan for 20-year tenure if the rate drops by 0.50% then your tenure would reduce by 30-months that is (2-years 6 Months) almost saving Rs 15 lac. But if the rate are upward trend then keeping your EMI constant then your tenure is going to go up same as above by 30-more months of EMI. Which would mean Rs 15 lac more.

So, its always good to manage your loan and keep changing EMI according to your financials. In interest rate downward times decreasing Tenure is good and in interest rate upward trend increasing EMI is good.

If you plan your loan well, you will be able to close it faster and home will be fully yours.

If you already have existing home loans then to plan it well and close faster, then manage the loan on Loanyantra for free Home Loan Management Company India: LOANYANTRA

If you are looking for Home Loans and want right home loan fit for you and to plan it well to close fast then apply on LoanYantra | Get Home Loan Online

ISRO Achievement and Learning From Them

ISRO (Indian Space Research Organization), one of the most esteemed organisations of our country has made India shine on the global platform.

In the last one year, ISRO has given us many reasons to feel proud and the latest addition to it, is the PSLV – C37 launch in Feb 2017.

02_loanyantra_isro-1Here’s throwback at some of the proudest moments of ISRO:

  • Mangalyan – I guess most of you would remember this. Mangalyan, Mars Orbitrar Mission, made ISRO achieve heights of popularity when it successfully entered the Red Planet’s orbit on September 24, 2014, after a 666-million-km journey from Earth. It is the first venture into the  interplanetary space.
  • The launch of PSLV or the 4th navigational satellite: On March 28, 2015, ISRO yet again achieved launch of navigation satellite or PSLV (Polar Satellite Launch Vehicle). This helps India have its own GPS.
  • The launch of 104 satellites in one go (PSLV – C37)– This latest achievement of ISRO has made it gain global recognition. In Feb 2017, ISRO successfully launched 104 satellites in one go. This is the biggest achievement and one of its own kind.

The series of achievement which this organization has achieved is remarkable and stands unparalleled. The efforts of scientist and minds of engineers who successfully managed this project and were able to execute it, is something which can teach us how to plan and work on it.

The achievements of ISRO are not only commendable but also learning for every individual and company. The recent development by ISRO is a clear reflection of hard work; persistence and patience which has made it achieve what it wanted.

What to learn from this?

If you are wondering that these achievements are merely restricted to ISRO then you are absolutely mistaking, these achievements are an example to show how every individual and company can attain its goals. Any kind of business or individual who is striving for success needs three basic qualities:

  • Patience
  • Perseverance
  • And Hard work

These qualities are not only important to achieve a company’s goals but also equally important to attain personal goals. Whether you are working in a company or running your own firm, if you have mastered these qualities you will definitely be able to achieve what you want and succeed at personal and professional front.

What Loanyantra Learnt From ISRO

Loanyantra is an organisation that was started an year back and is a revolution in the service industry. We have always wanted to simplify the house buying process and streamline the home loan process. In our tenure of work we have tasted the elixir of success and at the same time faced certain hiccups but that has never deterred us from working persistently towards our goal. Wisro-postere have always wanted to and will continue to work arduously towards improving our service and setting a new benchmark of success. Our arsenal of committed individuals has made sure that we are always able to deliver our best and have helped in improving the home buying process.

We are proud to witness the  ISRO’s performance and taking a cue from its success we are continuously trying to imbibe the same spirit, dedication and achievement. You are our inspiration for Make In INDIA concept.

 

Will it be a wise decision to take a max eligible home loan?

Decision would be based on multiple factors to be consider before you make a decision.

If you are young say if you are only 28 years and present CTC is good. Consider following factors.

  1. Other financial liabilities that you have.
  2. If you are not married then there it would add value by possessing a bigger house also beware of the costs which will be there for your marriage.
  3. If your work is going to have a good increments at least by 10% annually and you are planning your professional life for moving to next stage.
  4. Property you are buying is for Living or for renting it out.
  5. Work on the tax benefits you would get because of opting for loan.

My suggestion would be go with the Maximum and try to pay as much as you can before other costs come up in life. Like the marriage, kids, there education.

Always have following,

  1. Term insurance atleast 5–10 times your present salary.
  2. 10–20% as the emergency funds of your present salary. By means of Fixed deposits or equal safer and faster withdrawal.
  3. Start a health insurance for at least 3–5 lac apart from what your company is providing.

All the above if you start early at the age of 28 would be cheaper.

Then opt for maximum home loan.

If you plan your loan well, you will be able to close it faster and home will be fully yours.

If you are looking for Home Loans and want right home loan fit for you and to plan it well to close fast then apply on LoanYantra | Get Home Loan Online .

If you already have existing home loans then to plan it well and close faster, then manage the loan on Loanyantra for free Home Loan Management Company India: LOANYANTRA

Real time FAQs by Home Loan Customers

Home loan is with us half of our life time. We understand that. We take a little of your time to clear all your doubts.

Here are the FAQs regarding home loan which make you understand the concept better.

questions-regarding-home-loan_loanyantra1. What is KYC?

KYC means “Know Your Customer”. As the name suggests, banks or institutes collect the identity of the customers to know the uniqueness. Usually the financial institutes, collect these only to ensure they don’t give way for the fraud.

2. Why is a co applicant needed? And who can be a co applicant ?

Though a co applicant is not mandatory with any home loan, it is needed to increase the eligibility of the applicant. Anyone with direct blood relation can be a co applicant. For example, spouse, brother, son, daughter, father, mother.

3. How to transfer your property without being in the place in person?

If you are not in a position to do it yourself due to various reasons, you can give the Special powers to the person by making a deed of Special Power of Attorney.

Firstly, you should draft the deed with grantor (your) details, attorney details, reasons for giving power, the act to be performed, date and signatures of grantor and two witnesses.

The deed should be made on a Stamp paper of appropriate value according to the Rules of the State where it is to be registered.

The person to whom you send the deed should get it registered in the appropriate Government office as per the State rules. It can be either the Sub-Registrar office or the Sub -Divisional Magistrate office.

4. Can I send soft copies of my documents ?

Actually, all the documents need to be attested by the applicant and co applicant, if any. So, sending soft copies cannot be a good idea. If NRIs want to apply for home loan without coming to India, then the NRIs need to visit the embassy or notarized authorities to verify the documents and get the stamping done.

5. What is Processing Fee cheque ? Why do we need to pay ?

Processing Fee is paid to the bank before the loan application is approved. Which means, the fee for all the needs to verify the authenticity. Processing fee can be paid by cheque. The processing fee usually covers the legal verification charges, property and document verification charges.

Sometimes, there will be a zero processing fee period by the banks. So, during that period, the legal charges are charged separately.

6. What kinds of verification is carried while processing home loan ?

Initially, when the customer approaches the lender for a loan and provides his information, the lender to check the accuracy of information, conducts FI check. To make FI report, FI agents come to your office, resident and property for the basic confirmation.

After this, the detailed verification continues in two ways. Legal and technical. Legal check involves verifying Title Deeds, No Objection Certificates of authorities and other ownership papers of the lender’s property.

And technical check is important to estimate the market value of the property. So, the technical valuation is done to know the maintenance, the age of property, level of construction, square feet and built up area, quality of construction, required legal clearances, the locality and special comments and the market value of the property.

However, days have changed and the things have become simpler. If your property is listed in the bank’s approved project’s list, then the above process becomes simpler.

7. What is Personal Discussion (PD)?

Personal Discussion (PD) is a detailed and personal discussion held for checking the credibility of business officials.

Usually, the credit officer meets the business official in his office to have a detailed discussion about the ways of repayment of loan and methods of repayment by proving his business income.

8. How many days will it take to sanction the loan?

Usually, the loan sanction period varies from lender to lender. Nationalized banks take around a month minimum for disbursal. Whereas the private banks and the financial institutes might take a month maximum.

9. What is a sanction letter?

Once, the loan application is verified, the lender sends a sanction letter, accepting for the loan disbursal. Which shows all the details about the applicant and the loan applied for and for which property and what kind of loan, what is the tenure and the EMI. Suggest a complete check of all the details before the disbursement.

10. What is the validity of the sanction letter?

The validity of the home loan sanction letter varies from three to six months.

Once the sanction letter is expired, the borrower should again start with the initial step for borrowing the loan.

faqs-by-home-loan-customers_loanyantra
11. What is loan documentation?

Loan documentation varies from lender to lender, from property to property and from borrower to borrower. The usual documents required are personal documents say address proof, identity proof, pay slips, bank account statements, passport size photographs. The property documents say property’s title deed, no objection certificate, etc.  With these documents, the verification is processed before the sanction of home loan.

12. What are security cheques?

The security cheques are taken from the customer in the form of blank cheques (without signature on the cheque). The bank takes it and uses it only the EMIs are not payed. And these will be returned to you along with home documents, when you totally payback the loan.

13. What is home loan insurance and how it will cover?

The home loan insurance secures your home loan pay and in case of unseen emergencies the home loan pay is not stopped, instead it is covered and the dream home remains to your family.

The lenders either have exclusive schemes or tie-ups with insurance companies.

Usually, the insurance plans include cover for the home, properties in the home and cover for the life of the borrower too. It depends on the scheme the borrower opts.

14. What is EMI and P-EMI ?

EMI is Equated Monthly Installment.  The repayment of loan every month after the loan amount disbursal is EMI. For under construction properties, the loan amount is partially disbursed according to the construction progress. If the EMI is paid on that loan amount, then it is called PEMI.

Full EMI Vs Pre EMI

15. What is the cycle for EMI or PEMI?

EMIs and PEMIs are paid every month. The date can be fixed by the loan applicant, either the starting days or ending days of month. Usually, bank asks for a date in the first week of the month. This is the cycle for every month and every year till the repayment of loan.

16. How many times I can pay part payments?

Part payments can be paid either quarterly, half-yearly or annually.

17. Is there any penalty for part payments?

No, there is no penalty for part payments.

18. Can I pay part payments through online?

It depends on the bank. But many accept the part payment through NEFT (National Electronic Funds Transfer). In case you want to make part payment on your Home Loan Account through NEFT, you need to visit your bank’s nearest branch.

The Service Request number received during branch visit must be mentioned in the remarks column in the NEFT form while making part prepayment through NEFT.

The transactions with invalid request numbers will be rejected. NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Individuals can electronically transfer funds across the country from one bank to another bank participating in the Scheme.

19. How to get my amortization schedule ?

Visit your nearest branch and ask for amortization schedule. The banks usually charge a minimal amount. Though there are many amortization calculators online, once you should tally the bank’s schedule and the online calculator’s schedule. It is good to know how the amount is divided between the two components interest and principal.

 

Which bank gives instant approval for home loans?

Most of the bank will give you instant sanction of Home Loan based on your Eligibility. This doesn’t mean you will compulsory that you will get a home loan for that property.

Home Loan Sanction means you are eligible for certain amount of Loan. During the sanction whey would check following things

  1. Your Salary
  2. Your age
  3. Your Existing EMI
  4. Your Credit score
  5. Your KYC

If all are in place, then banks you issue a Sanction letter. Then you can go with legality Check and technicality check of the property you have selected. If everything is clear then you would get a loan. In case any of it fails then you have sanction letter and you have 3–12 months validity based on bank. You can search for one more property and continue with the loan.

Banks also have a Pre-approved loan concept. Where in banks would issue a sanction letter and later you have certain time to finalize the property.

Advantage of Pre-Approval Loans is

  1. You get to know your Loan eligibility
  2. You reduce one step of loan before you finalize the property

Disadvantages of Pre-approval loans is :

  1. You have to pay the processing fee.
  2. It has 3–12 months validity so you have to finalize the property with in that span or else you need to submit all the documents again. Trust me selecting the first home is not so easy and not so fast unless you are lucky.
  3. Most of the case you might have to submit the KYC documents again.

I would recommend you check your eligibility on home loan comparison portals like LoanYantra | Get Home Loan Online and then you select the property. Instead of going for pre-approvals.

If you plan your loan well, you will be able to close it faster and home will be fully yours.

If you are looking for Home Loans and want right home loan fit for you and to plan it well to close fast then apply on LoanYantra | Get Home Loan Online .

If you already have existing home loans then to plan it well and close faster, then manage the loan on Loanyantra for free Home Loan Management Company India: LOANYANTRA

No Processing Fees Period

Post demonetization has left the home loan sector in true benefits!!!

After the decrease of interest rates came subsidy for the home loan for the amount 12 lakh. The nationalized banks reduced the home loan interest rates making really competitive and tough to choose from. SBI stands as a pioneer to reduce the interest rates.

Yet another step by SBI which gave rise to further competition, no processing fees period. LIC Housing, Kotak Mahindra Bank are some of the followers in nullifying the processing fees.

This is the best time to avail the home loan or to opt for a balance transfer. Because, you can skip the charges as they usually go upto a maximum amount of Rs. 10,000.

no-processing-fees_loanyantraHow Does No Processing Fees Work?

Processing fee is charged by the institutes or banks which includes the charges for the document check, legal check and property check.

So, what happens during no processing fees period is, you have to  pay the legal charges separately. Whatever may be the extra cost, it doesn’t reach the usual processing charge limit.

But, always ask for the other additional charges while opting a loan during this season.

How Loanyantra Works on No Processing Fees?

Loanyantra, the first ever online home loan management company, suggests you which option is better. It makes you aware what kind of institute you can opt and what are the hidden charges by them. Be the first to know when there are promotions or offers by your favorite bank or institute.

Know more and avail more cash back offers on home loan. Happy Home loans.

When Can You Go For A Home Loan Transfer

Home Loans have become the most popular tool to achieve one’s dream of buying a home. With so many banks and HFCs offering tailored home loan solutions, people are now more inclined towards home buying. Banks and HFCs have home loan eligibility calculator that will help you assess how much loan banks will give you and what will be your EMI. 

Home Loan Transfer 

Balance transfer, home loan refinancing are interchangeably used with Home Loan Transfer. It helps the borrower to avoid higher interest rates by transferring to another lender which offers lower interest rates. Borrowers usually prefer this option to reduce the burden of interest rate and EMI. The good news is that all the banks and many HFCs in India offer the facility of home loan transfer.

Do You Know!

Although Home Loan Transfer appears to be a lucrative scheme yet one needs to try cost-benefit analysis before opting for a balance transfer.

Firstly, to avail the option of Home Loan Transfer, you need to be in the good books of the bank, make sure that you pay your EMIs regularly.

Secondly, balance transfer decision depends on the difference between interest rate offered by the two banks (one from where you have taken the loan and second from the bank where you wish to transfer your home loan).

Last but not the least, the outstanding amount of the home loan and the tenure left is also an important factor to consider before going for a Home Loan Transfer. Because, it is not a good deal if unpaid loan amount and tenure both are low. Though there are no prepayment charges levied, but while transferring the loan, calculate for the processing fees. It is calculated on the outstanding loan amount, usually, the maximum is Rs. 8,000.

home-loan-transfer_loanyantra-com
Calculate Before You Go For A Home Loan Transfer

Always calculate. For example, if 50 lac is outstanding loan amount and calculate-homeloan-transfer_loanyantra-comyour bank charges interest rate of 12 % then you have to pay a total of Rs 58, 01,513 as interest and you choose home loan transfer option to another bank offering interest rate of 11.5% for a time period of 15 years then the interest that you have to pay comes to be 55, 13,708 which means you save 2.87 lac.

This is a substantial amount and even if your bank levies a processing fee for home loan transfer, your saving is on a higher side. So,you can go ahead with balance transfer option.  

An important note which banks consider before lending is your credit score. Always check your credit score before applying for a balance transfer. It is important that your credit health score is good and you have all your bills cleared. 

Banks usually charge 0.5% of the loan amount or flat fees of Rs. 5000-10,000 as processing fee for home loan transfer.

How does home loan balance transfer help you?

Advantages of balance transfer includes the following :

  • It lowers the monthly installment
  • You can save on your interest and use for an important reason.
  • Makes your home loan more affordable
  • Banks and HFCs also offer customized solution that will match your requirement
Home Loan Transfer Process
  • Submit a request form to your current bank. The application also asks for the name of the new bank where you will be transferring the loan.
  • After this, the bank will look into your application and will issue an NOC (No Objection Certificate) that mentions outstanding loan amount.
  • This NOC is then submitted to the new lender and the new bank will study your credit history.
  • CIBIL score should be 700 points to get a loan. Once bank approves your application, all the property documents and other documents like ID proof, ITR etc. are transferred to the new bank.
  • Voila!!! You now have your home loan at a better interest rate and you are ready to smile even bigger now.

Our Role: LoanYantra is an unbiased platform where we offer you the best options pertaining to a home loan. Our home loan transfer service will help you find the right financial institution which will lessen your burden of home loan repayment. Moreover, we have up-to-the-minute information related to lenders and interest rate changes in particular.

Not only availing home loan transfer through loanyantra will make the process easier, but also we will keep a track of your interest rate till you close the loan and help you reduce it whenever possible which helps in saving on the home loan.

Talk to us and let us know your requirement about home loan transfer to serve you better.