Home Loan
A loan advanced to a person to assist in buying a house or flat.
What is Home Loan?
Home Loan is offered to individuals who wish to purchase or construct a house. The property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it.
Why avail Home Loan?
Sense of Accomplishment
Buying a home is one of the biggest financial investments you may make in your lifetime; and that's not just because of the sentimental value. The sum that most of us sink into our home does make it the largest component of our investment portfolio!
Capital Appreciation
For each one of us who has seen property prices boom over the last five years, the prospect of mouth-watering capital appreciation is the biggest argument for buying a home.
Low Interest Rate
Buying a home is a long-term decision of over a 10-year period; the interest rates may go through several up and down cycles. Therefore, you can be sure that you will benefit from falling rates at some point in the cycle.
Tax Benefit: Principal Repaymente
As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs.1 lakh on your home loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions.
Types of Home Loan:
Loans for Purchase of Land
Several banks offer loans for land purchase. Purchasing a land is a flexible option, the buyer can save funds and construct a house whenever his finances allow or just have the land as an investment.
Loans for Home Purchase
The most popular type of home loan is the loan for purchase of a new or a pre-owned home. This loan is also ../commonly available and is offered by many banks in different variants. The interest rate is either floating or fixed and generally ranges anywhere between 9.85% and 11.25%.
Loans for Construction of a House
This loan is specially designed for people who want to construct a place according to their wishes rather than buying a pre-constructed house. The approval process for this type of loan is different for it takes into account the cost of plot also. The most important clause when applying for a home construction loan is that the plot must have been purchased within a year for the plot cost also to be included in the loan amount. The loan amount is decided based on a rough estimate of the construction cost.
House Expansion or Extension Loans
Want another balcony or an additional bedroom? No worries, some banks also offer loans for house expansion including alteration of current structure and construction of new rooms.
Home Conversion Loans
People who have already availed a home loan and have purchased a house with it but want to move to a new house can opt for home conversion loans. By transferring the current loan to new house, borrowers can fund the purchase of the new home and also need not repay the previous home loan.
Loans for Home Improvement
Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation certainly will make your house look better.