What is Home Loan " the purpose of Housing Finance?

 

✅ What is Home Loan? What is the purpose of Housing Finance?

A Home Loan is an organised financing solution to buy a plot, home or develop/ construct/ renovate the existing residential unit. The property in the deal acts collateral and therefore home loans are essentially secured loans. The rate of interest is also attractive for Home Loans, compared to other types of loans. The loan amount is available as Loan-To-Property Value and that too for a long tenure ranging from 10 to 30 years, offering maximum ease of repayment to the borrower. You can apply online or offline for Home Loan in India now. There are exclusive tax benefits available on Home Loans, besides PMAY CLSS for the first time home owners.

✅ What are basic eligibility criteria for Home Loan?

To be eligible to apply for a Home Loan in India, the applicant (s) needs to prove the repayment capacity. Mainly factors such as age, income, employment status, place of residence, and property value are considered by lenders to assess the eligibility of a borrower. It is a common practice to add a co-borrower and enhance the home loan eligibility.

✅ What are different ways to improve my Home Loan eligibility?

You can improve home loan eligibility using any of the following: a) Adding a biological family member or spouse as a co-applicant, b) Presenting proof of other income sources such as Rental income, Interest yields etc to the lender. c) Adding working individuals as co-borrowers.  These steps will reduce the risk premium of your Home Loan application, thereby making you eligible for a larger amount.

✅ How do I calculate my Home Loan eligibility?

Your take home income is one of the most important factors to determine the Home Loan eligibility. Using a lender’s home loan Calculator is the easiest ways to evaluate loan eligibility. As a rule of thumb, know that your monthly instalment amount should not be more than 40-50 % of take home income. Thus if your salary is Rs 40000 the size of EMI should be less than Rs 20000 per month. So borrow for optimal amount to ensure ease of repayment.

✅ What are the documents required for a Home Loan?

Here is the list of documents required for applying a Home Loan: KYC Documents, including Address proof, Identity proof and 2 passport size Photographs; Form 16 and latest salary slips as income proof; All bank accounts’ statements for last 6 months; Business continuity & profitability proof; property documents; and ITR for last 2 years for self employed borrowers.

✅ Can I prepay Home Loan? Is there any penalty on prepayment of Home Loan?

Home Loan availed on flexible repayment structure can be repaid without any penalty. The borrower gets complete flexibility in repaying a home loan prior the repayment schedule.

✅ What are the tax benefits on Home Loan?

There are annual tax benefits on both principal and interest repayment of  a home loan. Under Section 80C of the Income Tax Act 1961, a borrower is eligible to avail tax deduction of up to Rs.1.5 lakh on home loan principal repayment in a FY. Besides, under Section 24B the borrowers get tax exemption of up to Rs.2 lakh on interest repayment for property they use for self-occupation. Under Section 80EE a first time Home Loan borrower is eligible for additional interest tax benefit of Rs. 50,000. You can claim these benefits while filing income tax returns each financial year when you are repaying a Home Loan

Wise investing 

Grow with knowladge