It is a dream for everybody to buy his or her own home. However, with the increasing cost of housing, buying a dream home has gone beyond once means, so most of the homebuyers have to opt for housing loan, which due to the increasing cost goes above 40 to 50 lakhs.
More important thing one has to consider after availing loan is protection of loan availed so that our dependants do not have to suffer for repayment of loan in case if something happens to the person who has availed loan. The best option is to buy a HOME INSURANCE PLAN.
Most of the Housing Finance Companies provides a bundled Home Loan Insurance plan along with the Loan. Premium for the Housing Insurance can be paid in lump sum by way of Single payment or the premium can be added to the loan amount. If the premium is added to the loan amount than your EMI will include your normal EMI for the Loan plus the premium for the Home Protection insurance.
You can go for the inclusion of insurance cost with loan as one gets same without going for additional registration cost and also gets rebate in interest component. Alternatively in high cost scenarios, one can go for Home Loan Insurance in Single premium as merging it with the Loan amount will increase the cost of EMI and in long term your outgo towards premium will be more than your Single premium as you are paying monthly interest towards the Premium amount in addition to the Housing loan amount.
Another aspect is whether you should go for a Home Insurance / Protection plan or buy a separate Term Insurance plan from LIC or any other Insurance providers. Let us analyse both the aspects :
WHAT HAPPENS WHEN YOU BUY A HOME INSURANCE / PROTECTION PLAN FROM HOUSING FINANCE COMPANIES ALONGWITH THE LOAN.
When you buy a home loan insurance/ protection plan from the Housing Finance Companies then your insurance cover automatically gets reduced along with the Loan i.e. If you have availed Rs.40 lakhs loan and take an Insurance plan from the same HFC and you have availed an insurance cover for Rs.40 lakhs and after 2 years if your Loan outstanding is Rs.38 lakhs then your insurance cover also gets reduced to Rs.38 lakhs.
WHAT HAPPENS WHEN YOU BUY A SEPARATE TERM INSURANCE
Let us take the same amount as in above example. Suppose you have availed Rs.40 lakhs loan (from any Housing Finance Companies ) and take a separate TERM INSURANCE for Rs.40 lakhs (in this case it is in no way connected to your Home Loan) and your Loan outstanding is Rs.38 lakhs after 2 years then in this case your TERM INSURANCE is not reduced and you are still protected for Rs.40 lakhs whereas in earlier case your protection gets reduced by the amount repaid by you.
So next time when you opt for Home loan please consider the following :
1) To take an Home Insurance Protection plan
2) Decide whether to pay single premium or combine it with your housing loan
3) Consider the advantages / disadvantages of a buying the Home Loan Protection plan from the same HFC or buying a separate Term Insurance Plan not connection in any way to your Housing loan.
sbi home loan India, home loan rates India, home loan India interest rate, home loan calculator India, home loan bank India, icici home loan India, home equity loan India, Home loan India emi calculator, home loan India nri, home loan India rates