Buying a home is one of the most common dreams of common men. But it is not easy when we all know how the cost is increasing day-by-day. A home loan is not less than a tiring process indeed. Banks keep asking for a variety of documents. They go through your credit history. Then they check your job-related information and other important personal information. After all this, there is no guarantee that Bank would be there to offer you a loan. In case, if any bank agrees to offer you a loan, they increase the interest rate.
But you do not need to get disappointed at all. You do not require to be dependent only on the bank to get home loans. You may also try other ways. If your parents, friends, and relatives are financially strong and stable, you may take a home loan from them too. Moreover, there are many benefits to it. Here, we are going to give you more detail about it.
Advantages Of Taking Home Loan From Family and Friends –
Now, you might be wondering what sort of benefits you can have if you take a home loan from your family or friends. Let us check it out –
- First, you would not have to get into a long process of doing paperwork. Your home loan process will be done within the stipulated time. We all know how paperwork has always been quite cumbersome.
- You will get a loan at a low-interest-rate since it will be in between you and the person from whom you are taking a loan. Does not it sound great? You and the second party can easily decide about it.
- Since your family and friends know you in a better way, they do not check your credit history, job, or other personal details. It means you would not have to bother regarding this at all. It gives you another peace of mind that you would not have to share your details with anyone else. You may keep it secret easily without worrying about it.
- You need a home loan for what duration, this topic both parties can discuss being flexible towards each-other. You do not need to worry about what the bank says. You and the second party can decide mutually and come to a decision which goes with both of you.
- In case, you get late to pay your loan then your family or friends can understand you and they do not take any action against it. You will remain stress-free in this context. Most of us have always been scared that what action will bank take in case we do not get to pay the loan on time. But here you would not have to worry about it since everything will go on the mutual decision.
- They do not ask you to follow any strong guidelines since they know you in a better way. And that is why it will not give an extra burden on your mind at all.
What Is The Process Of Taking Loan From Family or Friends –
Now, the thing comes into mind what is the entire process of taking home loans from family or friends. Is the loan given based on verbal communication? Then the answer is yes. There is no agreement required for this process.
Though you may take the help of a legal expert to take home loans. Do not take it quite personal otherwise, trouble might emerge later on and it may take time to get solved.
Benefits Of Home Loan –
Have you been wondering about the benefits of a home loan? You have landed at the right place indeed. You can have two types of benefits on a home loan. First, you will get a yearly deduction of 1.5 Lakh Rupees following section 80C. Secondly, you will get a discount of 2 Lakh on interest following section 24. Here, it needs to mention that you will get a discount following Section 80C only if a bank gives you a loan. You will not get this benefit if you get a home loan from family or friends. It means you will not get benefitted from Section 80C of 1.5 Lakh Tax-oriented discount.
Let’s understand it going with this example –
Suppose you take a loan of 20 Lakh from a friend or family that, you need to pay in 20 years. Andthe interest rate is 6%. Monthly EMI will be INR 14,329 and yearly interest will be INR 1,18,547 and yearly principal will be INR 53,396.
- Loan Amount – 20 Lakh
- Duration – 20 Years
- Interest – 6%
- EMI – 14,329
- Yearly Interest – 1,18,547 as per Section 24
- Yearly Principal – 53,396 as per Section 80C
To put in simple words, you will get concession following Section 24 on yearly interest 1,18,547. But you will not get any concession on yearly principal 53,396. Moreover, you can have a loan for reconstruction and repair. and you will get a concession on it of only INR 30,000.
How To Concession on Tax –
You will get a concession on the interest of 2 Lakh yearly. Now, the question comes into mind that how to get a concession of Section 24. It is one when a family member or friend issues a certificate mentioning that how much interest has been paid. You may also show this certificate to get concession in Income Tax.
Other Important Points –
In this section, we are going to emphasize other important points. let us check it out more about it.
- You will get a concession on Tax only when the property is self-occupied or you have been living in that property.
- You will not get any concession under-construction property. You will get tax concession only after getting possession of that.
- Before accomplishing the construction, the paid tax can be divided into 5 different categories after getting possession.
In The Last –
Hope this content has brought a lot of information to you clear your doubts. So, what are you waiting for? It is time to say yes the home loan from friends or family if it goes with you.