Home Loan

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Home or homeowner loans are a borrowing option open to most home owners. They are considered a secured loan, allowing the borrower to access some of the equity in their home. As with any loan, it’s important to check out different lenders and programs to find the option that best fits your individual needs.

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What Is A Home Loan?

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A home owner loan is not the same as your original mortgage, it is an additional loan that allows you to borrow money based on the equity in your home. This type of loan is usually easier to obtain than a regular mortgage and often processes more quickly. Because they are secured by your home they usually carry more attractive interest rates and terms than unsecured loans.

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Advantages Of A Home Loan

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There are many advantages to taking out a homeowner loan. It is a relatively low cost way to finance major purchases or home improvements, and the money comes with very few restrictions. A home loan can usually be processed and closed very quickly, and the fees associated with it are often much less than with other types of loans. Most home loans can be repaid over a longer term than an unsecured loan, and you have the option of clearing it early if your finances are sufficient.

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Eligibility criteria for home loan

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The eligibility norms for availing of Home Loans are easy and simple to follow. There are different procedures for the different types of property loans available. These eligibility norms for home loans are applicable to all resident Indians

The basic housing loan eligibility is:

• The applicant must be 21 years or older when the loan is approved.
• The loan must terminate before or when the applicant turns 65 years of age or before retirement, or whichever is earlier.
• The applicant must have a regular source of income: employed or self-employed.

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Loan repayment option

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The best home loans are those in which the loan repayments are done via equated monthly installments (EMI). It is a fixed amount which is paid every month towards the loan comprising both the principal repayment and interest payment. EMI payments start from the month following the month in which the full disbursement has been made. The EMI is to be paid every month through post-dated cheques (PDCs) , Electronic Clearing System (ECS) or you can make payment through cash also.

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Documents Required

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The following are required original documents for Housing Loan :

• A passport size photograph
• PAN card
• Voters ID\Ration card
• Passport or license for age-proof
• Last six months' bank statement
• Latest Form 16
• Certified IT returns for the past 3 years
• In some cases personal guarantors request are required documents for disbursal of the loan.Documents may vary from state to state.

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Tax benefits

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Resident Indians are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. Interest repayment of Rs. 75,000 p.a. (for a loan on or after April 1, 1999) can get you a tax saving up to Rs. 25,000 p.a. Moreover, you can get added tax benefits under Sec 88 on repayment of principal amount up to Rs. 10,000 p.a. which can further reduce your tax liability by Rs. 2,000 p.a.

The loan amount for housing finance depends on factors like income, age, educational qualification, total number of dependants on the applicant, spouse's income, total assets, current liabilities, stability and continuity of occupation and credit and savings history.