WATCH | Cut your home loan burden by Rs 10 lakh with these 3 smart strategies

Homebuying hacks: Homebuying can feel like a daunting financial commitment, especially when you factor in the lengthy repayment process of a housing loan. However, with a few smart strategies, you can make the process easier and reduce your loan burden notably. Here are three tips that could help you save around Rs 10 lakh.

Use prepayment to cut down your loan tenure

One of the most effective ways to reduce your home loan burden is through prepayment. Prepayment allows you to pay off your loan faster by making extra payments over and above your regular EMIs, either as a partial amount or a lump sum. This can help shorten your loan tenure and reduce the total interest you pay.

For example, imagine taking a home loan of Rs 50 lakh for 20 years at an 8.5 per cent interest rate. Your monthly EMI would be approximately Rs 43,391. Without prepayments, you would end up paying around Rs 54.14 lakh in interest, with a total payment of over Rs 1 crore.

However, if you make an annual prepayment of Rs 50,000 starting from the second year, you could reduce your loan tenure by around three years. You would effectively pay off the loan in just 17 years and one month instead of 20 years. The key to prepayment is using any extra income, such as bonuses or tax returns, to chip away at your loan.

Watch the full video here:

Take advantage of stamp duty concessions for women

Stamp duty is a significant expense when buying property, but there are savings to be made, particularly for women homebuyers. In several states, women receive a concession on stamp duty rates typically 1 per cent to 2 per cent lower than the standard rate.

For instance, if you're purchasing a Rs 1 crore property with a 7 per cent stamp duty rate, you would typically pay Rs 7 lakh in stamp duty. However, if the property is registered in a woman's name, you may only need to pay 5 per cent, saving you Rs 2 lakh instantly. This can make a considerable difference in the overall cost of buying a home.

Maximise tax benefits with co-applicants

Another way to ease the financial burden of homebuying is by taking full advantage of tax benefits. Under the old tax regime, an individual can claim up to Rs 2 lakh as a tax deduction on the interest paid for a home loan. If the property is co-owned and the loan has co-applicants, each person can claim this deduction separately, doubling the total deduction to Rs 4 lakh.

In addition to the tax benefits, having a co-applicant, especially an earning family member, can increase your chances of loan approval and may allow you to qualify for a higher loan amount.

By leveraging prepayment options, exploring stamp duty concessions, and optimising tax benefits with co-applicants, one can notably reduce the financial strain of buying a home.