Home loan is a product financed by banks to buy or repair a house for a consumer. These are the funds which the home buyer has to borrow (usually from a bank or other financial institution) to purchase the property. Different types of interest rates are available for these loans such as fixed rates, floating rates, and reducing interest rates. Home Loans has gained popularity over the last decade. Today around ninety percent (90%) of homes purchased in major Indian cities are funded by institutions through a home loan.
Home loans are provided based on the market value, mainly estimation given by banks or the registration value of the property.
Features of Home loan
- It is available for the purchase of house from builder / resale and construction / extension of existing house.
- One can avail for Home loans ranging from Rs.2 Lakh to Rs.200 Lakh depending on eligibility, income and repayment capacity.
- Home loan is a secured loan wherein collateral are required.
- Normally the maximum tenure of the loan is 20 years.
Types of Home loans
Following are the major types of home loans
· Home Purchase Loans:
This is the basic home loan for the purchase of a new home. You can use this kind of loans for purchasing a new home.
· Home Construction Loans
This loan is available for the construction of a new home on a said property. The documents that are required in such a case are slightly different from the ones you submit for a normal Housing Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFCs will include the land cost as a
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Component, to value the total cost of the property. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility.
· Home Improvement Loans
These loans are given for implementing repair works and renovations in a home that has already been purchased, for external works like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility, after obtaining the requisite approvals from the relevant building authority.
· Home Extension Loans
An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home; for example addition of an extra room etc. One can avail of such a loan facility, after obtaining the requisite approvals from the relevant municipal corporation.
· Home Conversion Loans
This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan.
· Land Purchase Loans
This loan is available for purchase of land for both home construction or investment purposes
· Stamp Duty Loans
This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
· Bridge Loans
Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.
· Balance-Transfer Loans
Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest.
· Re-finance Loans
Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you have taken drops over the years and you stand to lose. In such cases you may opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower.
· NRI Home Loans
This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or property in India. The HFCs offer attractive housing finance plans for NRI investors with suitable repayment options.
Benefits
· Pride of Ownership
Pride of ownership is the number one reason why people desire to own their home. Home ownership gives you and your family a sense of stability and security.
· Appreciation
Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. At the end of the day the value of your home will be more than the loan you have taken.
· Tax deductions
Home ownership is an excellent tax shelter and our tax rates favor homeowners. The mortgage interest is fully deductible on your tax return. For the principal paid, Upto a certain amount is also exempted from tax under section 24(1) (VI) and 80(c) respectively.
To understand the tax benefits available on your home loan, Just Give a Missed Call to IndianMoney.com on 02261816111 and ask our experts!You Might Also Like to Read |
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