Settling down in life is synonymous to many things. For some, it could mean getting a job, while for others it could be having a home of their own. Others might want to add a car to the wish list. We keep trying to settle down and things keep getting added to the list. Even so, owning a house is a milestone everyone wants to achieve in their life. It is a place to call your own, a place where your kids can grow up and a place to fill up with memories.
Buying a house should be more than an emotional decision; it has to be a sound financial decision too. You have to either save up for it or go for a loan after planning for repayment. HDFC housing loan calculator can be used as a tool to work out a suitable loan for the purchase of your home. Other than this, there are many things, which need to be planned out. Read along as we guide you through the planning stages.
1.Decide on the Type of House
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You could move in to a ready house, take a house under construction, buy the house from a previous owner or construct the house on your own. This decision impacts your finance options and hence it is important to be aware of the implications. The different loan options from HDFC are available for different types of property purchase and these vary in terms of interest rate and documents requirement.
2.Choose Your House As Per Your Budget
What is the cost of the house that you wish to buy? How much money have you saved up? You will need to have a minimum of 10% of the cost available with you for the down payment as you can get up to 90% of the amount as loan. It is better to have more savings for the down payment as the amount you can get depends on various eligibility criteria and a heavy loan can take a long time to repay. A heavy loan can cause a heavy burden in terms of EMI as well.
3.Check Your Funds for Down Payment
You could have money saved up in your bank account and other investment portfolios. You might have some fixed deposits as well. If these are not sufficient, you can also make use of the money available in the Provident Fund. You could choose to take some money out from your provident fund as you are permitted to use up to 90% of the PF amount to make down payment for a home. Decide which of these instruments you wish to use to arrange for funds for making the down payment.
4.Check Your Loan Eligibility
With the down payment sorted, you can now start looking at the various loan options. Use the HDFC bank home loan calculator to calculate the amount that you are eligible for. That can help you finalize the amount that you wish to put in as down payment. You might even be able to keep some of the savings for emergencies. In an ideal situation, you can get up to 90% of the property value, but the eligibility depends upon your current financial status and income. It also takes into consideration your other financial commitment towards any other existing loans.
5.Use HDFC Housing Loan EMI Calculator
As the next step, you need to check the amount that you can take out from your monthly earnings to make a payment towards the EMI. You need not worry about how to calculate home loan EMI as you can make use of the home loan EMI calculator to do this for you by simply filling up the required fields of loan amount, the interest rate and the time period for the loan repayment. You will instantly get the EMI value as the result. Calculate the EMI for different combinations till you arrive at an EMI that you could comfortably pay every month without impacting your normal lifestyle.
Additional Read: Know about HDFC Home Loan
6.Evaluate the Tax Benefits
A housing loan allows you to save on tax by getting deductions on the interest paid. You can find out the interest paid with each EMI using the home loan interest calculator. When you calculate the EMI, it has two components to it – the principal and the interest. The detailed breakup of this is available through the amortization table. Thus, you can calculate your interest paid for the year and claim the deductions.
In the initial installments, the interest component is large and the principal paid is smaller. This is because the interest is calculated on the principal amount, which is outstanding at the beginning of the month. As the installments get paid up, the principal outstanding reduces and hence the interest component of the EMI becomes smaller resulting in the principal component becoming larger. Accordingly, the tax benefit reduces towards the later years
7.Finalize the Loan Details
Now that you have all the numbers in place, it is time to finalize the loan details. If you have your down payment ready with you, you can apply for the loan for the balance money. Use the home loan EMI calculator to calculate the EMI and understand the total interest paid over the repayment tenure. Keep in mind that the interest paid should not be more than the principal amount repaid.
Plan your finances carefully and continue saving up for the dream home till you are ready for the purchase. Before you sign the final documents, read the terms and conditions carefully.