When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays you. In Reverse mortgage, Bank takes part of the equity in your home and convert it into payments for you – a kind of advance payment on your home equity. The money you get usually is tax-free.
Generally, you don’t have to pay back the money for as long as you live in your home. When you die, your estate will be used to repay the loan.
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Reverse Mortgage loans are not right for everyone. It may surprise you to hear a lender say this, but it is true. If you are looking for a short-term loan you may be better suited for a different type of financing. A reverse mortgage loan can sometimes require closing costs and upfront mortgage insurance premiums which would make it impractical as a short-term solution in some cases.
However, for those who wish to remain in their homes and need extra cash flow to do so, the Home Equity Conversion Mortgage may be exactly what you are looking for.
Financial distress on account of the Covid-19 pandemic is the biggest challenge to bringing lives, communities and the weakening economy back on track. Millions of people have lost jobs. Millions more have had to take deep pay cuts. Many families have lost their sole breadwinner.
Welcome to FintooInvest!
Are you searching for a quick online loan? Do you need a hassle-free loan? Are you still waiting for the disbursement of a bigger loan and paying out installments from your own pocket?
Now search no more. FintooInvest is committed to assist with quick and easy loan processing. Here is why you should opt for FintooInvest for availing online loans:
- Quick Disbursement
We at FintooInvest, make sure to process the loan requirement quickly, and hence you would receive the disbursement within 2-3 days.
- Minimal Paperwork
We require very few documents for disbursing the loan requirement, unlike traditional loan processing. So you are not buried under documentation requirements.
Since we charge no prepayment fees and also we charge lower interest rates for EMI, it is a Win-Win situation for both of us.
- Amazing support system
We at Fintoinvest brag about our consistent support service before and after loan processing. So, we are at your assistance 24/7
We charge no hidden costs and hence you can be assured that loan processing is transparent.
What types of loans you could obtain from FintooInvest?
- Personal Loan
As the name suggests, FintooInvest can help you avail a quick personal loan, be it for a wedding or for renovation or major repairs or even any medical emergency (of course the part which health insurance does not cover)
- Professional Loan
It so happens that professionals like Chartered Accountants or Engineers or Doctors need some bridge loans while carrying out their practice. FintooInvest is at your service and will help you avail the professional loan.
- Business Loan
Liquidity crunch is the biggest issue that businessmen try to handle by taking a loan from small-time lenders. With FintooInvest, you would be assured that cash crunch will not be a problem anymore for you.
How can you avail online loan from Fintoo Invest?
- Step 1
Create a login ID on FintooInvest or log in from your Google or Facebook account.
- Step 2
Once logged in, you can click on the loans button, which will have a dropdown menu consisting of
- Step 3
Depending on your requirement, click on the loan and you will need to select a preferred loan partner. After selecting, the FintooInvest website will take you to the external website of the preferred loan partner.
- Step 4
Create a linked loan account on the loan partner’s website as per the requirements mentioned on the website. You may need to carry out one-time submission and KYC verification of the documents in this process. And then you are set to go.
- Step 5
The Loan partner will carry out a credit score to check your eligibility to avail of the loan considering that you are able to repay the loan with the existing incomes and liabilities. Don’t worry, this is a standard procedure and is meant to be there so that you would not get into trouble while paying off the loan later on.
Certain pointers to check while applying for online loans:
- Always check the charges like prepayment charges, interest rates, etc to be in the know of the costs carried.
- Always opt for installments to be equal to or less than 50-60% of your in-hand income. EMI’s would otherwise take a huge chunk away from the disposable income.
- You can always check with the loan partner if you could add income of the spouse so that the probability of obtaining the loan increases.
We all know that buying a home is a complicated process. It is not like going to the mall and getting a dress of your choice. Applying for a home loan is one of the initial steps you have to take while purchasing a house.
A home loan is a great form of financial assistance if you are short on cash, or you are not in favor of redeeming your savings and investments. Though it may seem all banks are very keen to lend, getting a loan sanctioned can be a cumbersome task. Also, similar to any other financial product, it is important to be familiar with how home loans work to avoid any bad experience later. It is important for you to be knowledgeable about your finances.
Now let us see some important things you should know before signing the documents of home loan.
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Credit Score Maintenance
Credit score is one of the most important and essential factors which banks consider before providing any loan to its customers. A trusted credit bureau prepares and maintains your credit records and shares it with the banks/lenders whenever an enquiry is made by the loan provider. A score above 750 and close to 900 is considered great by lenders. This score depends on how consistent you are or how good your record is for paying your EMIs and credit card dues. In consequence, leading to an easy approval of the loan at low rate of interest. Make sure you to check your credit score at least six months, preferably 12 months, before you plan to take a home loan.
The interest rate
The interest rate you will be charged on your loan against property will depend on a number of factors, including your income, loan amount, tenure, credit history and may also varies from the banking institution or lending service chosen by you.
It is also important to consider which type of interest rate would fit as per your needs and current situation before applying for a home loan.
There are two types of interest rates – floating and fixed. As the name suggests, A fixed rate of interest is when the interest rate stays constant from the time the loan was sanctioned, irrespective of any variations in the market. On the other hand, a floating interest rate signifies that the interest rate at which the loan was sanctioned will change as per the market conditions.
Most borrowers prefer a floating rate of interest over fixed interest rate because fixed rate of interest comes with a fixed liability and also a foreclosure penalty. Whereas, the floating rate of interest changes from time to time and can help saving money on your interest, other expenses and monthly EMIs.
The time you take in clearing the sanctioned loan is considered as your repayment tenure. The repayment tenure and your EMIs are connected with each other. While a longer loan tenure makes your EMIs smaller, thus, increasing the affordability of your loan, you should keep in mind that a longer tenure also increases the interest rate resulting in increase in the amount of borrowing.
This is because the interest on the loan is calculated in a compounding manner, so if you have a longer tenure you will be paying more in the long run. It is always advisable to opt for a shorter tenure, because the more time you take to pay off the loan, the more interest you need to pay.
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Firstly, set your budget before buying a home. How much money you can consider for down payment and how much of home loan would you require. Banks offer diverse EMI options to cater to and suit different needs of the borrowers. Identify the EMI range that you are comfortable with, as that will help you decide the tenure of the loan. EMIs also depend heavily on the down payment you submit at the time of making a house purchase. The bigger the sum of down payment, the lesser the pressure of the outstanding amount being transformed into EMIs. Also, ensure that your chosen EMI amount does not exceed 50% of your total income.
Processing and other charges you will have to pay
A very important cost that borrowers mostly forget to consider into the cost of a loan is the processing fee and other charges that some lenders may impose like service charges, prepayment charges, statutory charges, stamp duty etc. you have to pay to get the loan as per state charges. Hence it is important that you add all those charges when estimating the real cost of getting the loan. Such charges may seem small, but can bring about a significant change in the cost of borrowing the loan, and can affect your ability to repay the same.
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These were some of the points that you should consider before deciding to get a home loan. This will ensure that the whole process goes without major hiccups along the way.
Mr. and Mrs. Sharma, both in their early 30s, after completing 5 years of their married life decides to have a house of their own. Both husband and wife are working at good positions in corporate and are regularly paying income tax on their incomes. After sheer hard work and a lot of savings, they will finally be able to make a house of their own. Both of them are really excited to live in their own house. They have invested almost everything they had in this new house.
Mrs. Sharma has big dreams for the house. She has all the color combinations and furniture designs pre-decided. While Mr. Sharma has planned to hire the best architect for their house. But all these dreams are becoming a reality after cutting their leisure for the past 5 years. Also after saving every single penny they could in these past 5 years. Most probably this scenario will continue for a few more years as they have invested everything they had in their dream house.
Well, this case study seems to be familiar to most of the people around us. They are passionate people who work really hard to fulfill their dreams. All of us have a list of wants, actually a pretty expensive wish list to be checked in as little time as possible. But just hard work is not enough for these purchases. One needs to consider the tax-smart alternative to pay less by using tax planning.
So, before we see some ways to plan our taxes on home loan, let us first understand the concept of tax planning.
Tax planning is simply arranging your financial activities in such a way that maximum tax benefits are enjoyed. This can be done by making use of all beneficial provisions in the tax laws. It helps any person to take full advantage of all available exemptions, deductions, concessions, rebates, and reliefs within the boundaries of the law. Tax planning is important to avoid expensive tax blunders people make. It is also helpful in planning your financial transactions in a manner that you can legally reduce your taxes.
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The Income Tax Act, 1961 under various sections provides us the opportunity to plan our investment. Thus, you can claim various exemptions and deductions against the quantum of your tax liabilities. Now let us discuss a few of the most common tax planning tools with you which will assist you in optimizing your home loans.
Tax benefit on home loans
Home loans are highly advisable options for tax planning as one can claim a deduction in 3 different sections for the repayment of home loans. Thus resulting in huge tax savings. So to make it simple, let us understand this benefit by categorizing the repayment into two components. First is repayment of principal amount and second is repayment of interest on home loans.
The deduction for repayment of principal amount on home loans can be claimed under Section 80C of the Income Tax Act, 1961 up to ₹ 1,50,000. While the interest paid on home loans can be claimed under Section 24 of the Income Tax Act, 1961 up to ₹ 2,00,000. Also, an additional deduction of₹50,000 for interest on home loans can be claimed. First-time buyers can claim this additional deduction under Section 80EE of the Income Tax Act, 1961.
As Sharma’s were earning well, they could have invested their savings in some eligible funds and claim deductions thereof. Moreover, had they considered the option of a joint home loan, they both could have claimed deductions for payment of principal and interest amounts in respective sections as discussed above.
These smart choices would have given them the option to have their dream house much before, instead of making them wait for 5 years. Also, they could have even enjoyed their lives without sacrificing much in their leisure.
Tax planning is like a win-win situation for everyone. We, the taxpayers are able to plan our activities in such a manner that we attract minimum liability to tax by taking full advantage of tax laws. Our government also is at advantage as the exemptions and deductions that we get can be utilized only by making investments in various schemes initiated by the government. Finally, our nation will also prosper as the money invested by us in government schemes will help in the development of our country and those schemes will also generate employment in the nation. Thus, your simple step of tax planning is even helping our society to grow.
Tax planning is not something you do at the last moment before filing your tax return. Tax planning is much more than that last moment rush. It is a disciplined approach. One has to be smart enough from the beginning of the financial year to plan all the transactions considering the tax-smart choices so that you don’t end up paying more taxes than you have to!