What is Home Loan?- Its Important Features & Benefits
What is Home Loan?
- Home loans help people to achieve their dream of home ownership.
- A home loan is a secured loan that can be availed from both banks and Non-Banking Financial Companies (NBFCs) for the purpose of buying a residential property.
- Home loans have varying interest rates which are often linked to your credit score. The normal tenure is up to 30 years and the amount has to be repaid in Equated Monthly Installments.
- Tax deductions are possible on both the principal amount and interest component of the home loan amount. This is possible under Section 80C and Section 24 respectively of the Income Tax Act.
Purpose of Home Loans
Home Loans for purchasing, building, renovating, repairing, or redecorating a perfect living space. One can also opt to transfer the existing Home Loan from another lender over to a new lender.
- For the purchase of a new/old residential unit (it may be an independent house/ flat/villa/an apartment etc.)
- For the construction of a residential unit on an existing non-agriculture plot.
- For the extension of the existing residential property with repairs and improvements.
- For the Take-over of a housing loan availed from another bank / FI Completion of the under-construction residential unit.
- For the purchase of solar power panels along with the purchase/construction of the house.
Eligibility for Home Loans
- The applicants must be Indian citizens and NRIs’. Loan eligibility depends on the value of the property and the repayment capacity of the borrower. Other important factors
- Age
- Co- applicant’s income
- Continuity of occupation
- Credit Information Bureau (CIBIL/Experian, etc.) track record.
However, the sanction of loans to individuals is the sole discretion of the Bank. Here Bank has the right to approve or reject the loan without assigning any reason.
- The minimum entry age for the loan is 18 years and the maximum exit age is up to 75 years.
- Individuals may apply for the loan singly or jointly with other eligible individuals.
Quantum of Loan - The Limit of Loan Amount
- There is no limit on the quantum of the loan amount.
- The maximum loan amount for repairs/renovation is up to Rs.30 lakhs.