Type of Home Loans in IndiaHome
Loan Buying
a house is one of the biggest dreams come true for most people and an
extravagant affair altogether. Imparting life to such a dream requires a lot of
effort from the buyers’ end and the best one can do to accommodate the home in
their budget is through a home loan. A home loan can be opted to buy
a new house/flat or a plot of land where you construct the house, and even for
renovation, extension, and repairs to an existing house. This is the most common type of home loan availed to purchase a house. There
are many housing finance companies, public banks, and private banks that offer
housing loans where you borrow money to purchase the house of your choice and
repay the loan in monthly instalments. You can get up to 80%-90% of
the house’s market price in the form of financing. The lender will hold the
house until you completely repay the loan. Benefits of Taking a Home Loan Tax benefitsThe
foremost benefit of a home loan is the income tax deduction you
can claim on the interest and principal repayments. You can claim up to Rs.1.5
lakh on principal repayments u/s 80C, up to Rs.2 lakh on interest repayments
u/s 24B, up to Rs.2 lakh on interest repayment in special circumstances u/s
80EE and 80EEA, and up to Rs.1.5 lakh on stamp duty expenses u/s 80C. Lower interest rate The
home loan interest rate is much lower as compared to any other loan types
available. If you come across a cash crunch, you may get a top-up on the
existing home loan at a lower interest rate than a personal loan to solve the
issue. Due diligence of propertyWhen you go through a bank to purchase a house, the bank will conduct thorough
checks on the property from the legal perspective and check if all the
documents produced are valid. This
due diligence check from the bank’s end will reduce the risk of you being
scammed. If the bank approves the property, that means you and your house are safe. Long repayment tenureUnlike
any other loans, home loans come with longer repayment tenure, as much as 25-30
years. This is owing to the significant loan amount one will have to borrow to
purchase a house. Spreading
the loan amount and interest applicable over a longer tenure will reduce the
monthly EMIs reducing the borrower’s burden. No prepayment penalty When
you take a floating-rate home loan, you can make prepayments towards the loan
whenever you have a lump sum at hand without having to pay any prepayment
penalty. This will help you close the home loan much before the set loan tenure.
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