Home loans help you realize your dream of owning a house. You do not need to break your savings and investments or impact your other important financial goals such as children’s higher education or retirement. The loan comes with a host of benefits and features. However, before applying for home loans, you should be aware of every aspect. So, here we are unravelling everything related to the housing loans so that you make an informed choice.
Features and benefits of home loans
Easy availability: All the financial institutions and NBFCs are offering attractive housing loan schemes. One can avail of the home loan after checking their eligibility to meet his/her requirements.
Multi-Purpose: Housing loans are multi-purpose loans that are available for various purposes such as buying a new residential flat or building, constructing a new house on a plot, home renovation, or extending your current house.
Lower interest rate: Being a secured loan, home loans are generally subject to lower rates of interest as compared to other financing options.
Fast loan processing: Home loans involve lenient eligibility criteria and minimal documentation. This enables financial institutions and NBFCs to process the loan amount faster.
Long Tenure: Since the loan amount involved in housing loans is high, the tenure to repay that loan can go up to as high as 30 years. This allows the borrower to choose an affordable EMI and ensure that his monthly budgets are not under any kind of pressure.
Tax benefits: You can claim a tax deduction of Rs. 1.5 lakhs on the principal repayment under Section 80 C and Rs. 2 lakhs on the interest repayment under Section 24 B. You can also claim a home loan tax deduction when you pay for the registration fees and stamp duty charges under Section 80C.
Note: The Union Budget 2020 specifies an additional deduction of Rs. 1.5 lakh for interest repayment on home loan taken by 31 March 2021 under Section 80EEA, to purchase a house costing up to Rs. 45 lakhs. This additional deduction is being provided over and above the existing 2 lakh deduction.
Balance transfer facility: With the help of a home loan balance transfer facility, you can refinance your existing home loan to another bank that is offering lower interest rates or better loan terms.
Top-up loan facility: In a top-up loan facility, you can borrow an additional sum over and above your existing home loan and use it for any personal or business purposes.
Basic eligibility criteria for a home loan
Useful tips for first home loan buyers
If you are buying a house for the first time, you may already have explored many home loans options in the market. You may also be anxious about many factors such as the interest rates, the loan amount, margin, etc., as a home loan is a long-time commitment. Therefore, to make your house search easier, we have provided some tips below which will ease your anxiety around home loans.
Application Form: Signed Application form with your latest passport-sized photographs
Proof of Identity: Photocopy of any of the documents such as PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License
Proof of Age: Photocopy of any of the documents such as Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License
Proof of Residence: Photocopy of any of the documents such as Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
Proof of Income for Salaried: Copy of Form 16, latest payslips, IT returns (ITR) of past 3 years, and investment proofs (if any)
Proof of Income for Self Employed: Details of ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details and Proof of Business Address
Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan
Note: Please note the documents may vary from one financial institution to another. You might be asked for additional documents depending upon your financial institution.