Many individuals opt for a home loan in order to finance their property-related expenses. It is the most popular choice, and compared to other loans, its interest rates are quite reasonable. Therefore, picking the appropriate lender is essential in order to enjoy a hassle-free borrowing experience and reap the maximum benefits.
In this article we are going to talk about home loan and everything related to its credit product.
What are the features of a home loan?
Individuals looking forward to opting for a home loan must know the following features of this secured credit line:
- Simple eligibility parameters
Being a secured loan, financial institutions offers to avail home loan at simple eligibility parameters. To be eligible for the required credit, borrowers must meet certain requirements. A few of them include:
- The age range for salaried positions is 23–62 years old, while for self-employed applicants, it is 25–70 years old
- Salaried applicants must have a minimum of three years of work experience
- Self-employed people must present documentation demonstrating a minimum five-year business continuity
- Nominal documentation
The documentation process for home loans are quite nominal. In order to apply for this credit product, applicants will have to produce some basic paperwork, such as:
- Proof of income, such as salary slips or last six months’ bank account statements
- KYC documents for identity proof
- Proof of business of at least 5 years
- Flexible repayment tenor
Home loans give borrowers the freedom to select a tenor in accordance with their financial capacity. A short tenor, for instance, would lower the overall interest rate. Despite the fact that EMIs will rise, this problem can be overcome by careful financial planning. In this regard, one can use a home loan EMI calculator to know the monthly obligations even before applying for a home loan.
How to apply for a home loan in India?
Willing applicants can follow these simple steps in order to apply for a home loan:
Step 1: Visit the official website of your preferred lender and locate the home loan application page.
Step 2: In the application form, fill in all necessary details and submit the documents as asked by the lending institution.
Step 3: Pay the processing fees, if applicable and submit the application form.
After successful completion of the steps mentioned above, a representative from the lending institution will get in touch with you and guide you through the next steps.
What are the tax benefits on home loan?
Both the principal and interest components of a home loan can be tax deductible for borrowers. One can take advantage of the applicable exemptions under certain sections.
Here are sections under which borrowers can claim home loan tax benefits:
- Section 24 (B)
Borrowers are eligible to receive up to Rs. 2 lakh Home loan tax exemption for a self-occupied or under construction property. Customers opting for a home loan for house construction, remodelling, or repair are eligible for tax savings of up to Rs. 30,000.
- Section 80C
Under section 80C, individuals can receive a deduction on principle repayment of up to Rs. 1,50,000. They can claim exemption on the cost of building a home or buying a property from their home loan. This clause permits the reimbursement of costs for the property, including stamp duty, registration fees, and other associated costs.
What is a decent CIBIL score for home loan in India?
Lending institutions impose a minimum CIBIL score requirement of 650 or above for home loans. Anything below 550 is seen as a poor credit score, and a CIBIL score of close to 800 is considered as excellent for home loan.
In this regard, existing borrowers can also check their pre-approved offers extended by renowned financial institutions on a variety of financial products, including home loans. These pre-approved offers streamline the application procedure and lessen the burden of paperwork. Borrowers can check their pre-approved offers by entering their names and contact number.
Willing borrowers can opt for a home loan by following this information. However, one should make sure to repay the monthly instalments in a timely manner and enjoy a hassle-free borrowing experience.