What is Home Loan?

A home/housing loan, also known as a mortgage, is an amount of money borrowed by an individual, usually from banks and companies that lend money. The borrower has to pay back the loan amount with interest in Easy Monthly Instalments or EMI’s over a period of time that can vary between 10-30 years depending on the nature of the loan.

Benefits of Home Loan

• Tax benefits

To encourage more and more people, buy their own house, government of India provides tax deduction on the principal as well as interest paid on home loan. An individual is eligible to claim a deduction of up to Rs 1.5 lakh under Section 80C of Income Tax of India 1971 Act in a financial year. While a deduction of up to Rs 2 lakh is allowed on the interest portion under Section 24B of Income Tax of India Act. The deductions under income tax are only available after the construction of the house is complete. You can’t claim the income tax deductions while the property is under construction.

Read: to know more about home loan deductions.

• No prepayment charges Unlike other loans where lenders charge prepayment penalties on payment made towards home loan, there are no prepayment penalties on floating rate home loans. So, whenever you have surplus money, you can utilize it for making part payment towards your home loan and lower your burden. However, there will be prepayment charges in case of floating rate home loan.
• Balance Transfer Facility In case of home loan, you have the facility to transfer your home loan to different lender if he is giving you loan at a lower interest rate. Check out our Balance Transfer Calculator to know how beneficial it will be for you to transfer your loan amount.
• Makes it easy to buy dream home For many people buying house with own money is not possible, home loan as it can be repaid in easy monthly instalments makes it easier to buy a house.
• High repayment Tenure Among all types of loan, home loan has the longest repayment tenure which goes up to 30 years, so one can reduce the burden of equated monthly instalments by extending the tenure
• Enjoy capital appreciation You will also benefit from the rise in prices of the property over time. Saves you from paying rent

Documents Required for Home Loan

Documents Required for Home Loan - Self-Employed Individuals

Identity Proof: PAN Card (mandatory) and any one of the below documents:

• Voter Card
• Aadhar Card
• Valid Passport
• Driving License
• Photo Credit Card
• Photo Identity card issued by Govt. body
• Letter from recognized public authority or public servant verifying the identity of the customer with photograph (not more than 30 days old)

Address Proof: Any one of the below documents:

• Voter Card
• Aadhar Card