Being A First time Home Buyer will have Advantages

Buying a house, in general, is as complex as it is exciting. So you can imagine how daunting buying a house for the FIRST TIME can be. If you’ve been following our home buying guide, this whole process should be a piece of cake for you as we’ve filled you in with the nitty-gritty details of the home buying process, associated budgeting, first-time homebuyer tips and whatnot. If not, this blog will hit all the right chords and give you the confidence and push to buy your first home. Hang on with us a little further to understand the Advantages of Being A First-time Home Buyer.

Key Takeaways:

• Tax deductions that you can enjoy during the loaning process.
• If and when you can apply for and leverage the government introduced PMAY scheme.
• Advantage of being a woman home buyer.

Tax Deductions

Gone are those days when people waited till they have stabilised their careers and are in a place to take the risk of buying a home. First-time homebuyers in India today fall into the age bracket of 25-35 years. However, this significant jump brings a few concerns and constraints considering the kind of financial commitment buying a home is. More often than not, you are just settling into your career or starting your family, which are fundamental commitments as well.

With a lot happening in your personal and professional life, saving, managing your monthly budget and repaying loans can be a lot. This is why the Indian government supports and encourages first-time and all home buyers with tax deductions. The Income Tax Act 1961 allows borrowers to get tax benefits under Sections 24(b), 80C, 80EE and 80EEA.

Section 24(b):
According to this section, you can get a tax rebate on the payable interest amount if you’ve applied for a home loan for a property that is yet to start or is under construction and have claimed for a tax deduction. You can get a tax rebate of up to ₹2,00,000 only if the building is completed within 5 years from your loan application date. If this condition is not satisfied, you can claim up to ₹30,000 on your payable interest.

Section 80C:
This section allows you to get a tax rebate on your stamp duty as well as on your principal loan amount. Claim a tax deduction of up to ₹1,50,000 each on your stamp duty the one time it is incurred and principal. For the latter, be sure before you claim as you cannot sell the property until 5 years after possession.

Section 80EE:
For properties priced under ₹50,00,000 for which the loan applied for is under ₹35,00,000, you can save up to ₹50,000 on tax. Furthermore, first-time buyers get an additional ₹50,000 deduction through this section. The tax rebate will be worked upon the interest amount only.

Section 80EEA:
This tax benefit is primarily for affordable home buyers and first-time home buyers. On the payable interest, get a rebate of ₹1,50,000 on properties whose stamped value is less than ₹45,00,000. However, if one is claiming this benefit, they will not be eligible for the benefit under Section 80EE.

To churn the best out of these tax deductions and benefits, apply for a joint loan with your co-owner. This co-owner could be one of your parents if you’re unmarried, or your spouse if you have a family. By doing so, both you and the other person can enjoy these benefits on your taxable incomes, individually. The only thing to keep in mind is that you cannot avail the total amount of benefit. In other words, the maximum benefit should be under or exactly equal to the amount that you have to pay as principal or interest; it cannot be more.

PMAY Scheme

With the affordable housing category gaining more attention and popularity among first-time buyers, you need to be aware of this highly benefitting government housing loan scheme – the Pradhan Mantri Awas Yojna or the PMAY scheme.

This government initiative was actioned in 2015 to provide ‘Housing For All’ by 2022. It was started off to benefit and encourage the first-time buyers belonging to Economically Weaker Sections (EWS) and Low Income Groups (LIG) to buy homes. The central vertical under this scheme that supports these groups is the Credit-Linked Subsidy Scheme (CLSS). Now, the PMAY Scheme has diversified to help the youth belonging to MIG-I and MIG-II as well. However, it is only applicable for properties under ₹45 lakhs.

To apply for the PMAY scheme, you require no additional documents other than your salary details and your AADHAR Card. Other than this, you will have to submit a declaration stating and signing that you do not own a pucca house. For salary proof, you will be expected to submit your salary slips, income tax returns or form 16. In the case that you don’t have any of the previously mentioned, you will have to submit an affidavit declaring your total family income.

Advantages of PMAY Scheme:

• Reduced overall EMI as the PMAY subsidy extends up to 6.5% on home loan interest with a long repayment tenure of 20 years.
• The scheme makes it compulsory for the woman of the house (mother, wife or daughter) to be made the homeowner. Hence, if the applicant is male, he has to make the woman the co-owner of the property.
• If a first-time homebuyer meets all the eligibility criteria pertaining to the scheme, they can easily get an interest subsidy up to ₹2.67 lakh.
• The GST rate for PMAY applicants is now only 1%.

Vision Properties in Hyderabad, offers affordable, luxury 2 and 3 BHK homes. The apartment building is located in the centre of Sangareddy and is well-connected to schools, banks, hospitals and commercial centres. Making it a sought-after location for home buying. Connectivity is not a problem with railway stations and the Inner and Outer Ring Roads are in close proximity. So, if you are looking for a comfortable and luxurious lifestyle, Vision Properties is the place for you.

Women Buyers

Women homeowners have a lot of benefits to leverage. Only in the previous section did we mention the advantage PMAY scheme offers women by making them homeowners. The next is the subsidised interest rates in banks. Most of the top banks prefer women home loan applicants owing to their clean credit card statements. These financial institutions give 0.05-1% concession on the home loan interest rates to encourage them further. Banks like SBI, HDFC and others have come up with exclusive schemes like ‘Her Ghar’, ‘Women Power’, ‘Mahila Awas Loan’, etc.

Now that you know all the advantages you have as a first-time homebuyer, buying a house for the first time will not be as daunting as before.