Features & Benefits of Home Loans

The borrower of a home loan is provided with a number of advantages, including lower interest rates, tax advantages, flexible repayment terms, and more.

1) Attractive Interest Rates

Compared to other types of loans, home loans are available at cheaper interest rates. To buy your ideal home, getting a home loan is preferable to using any other sort of loan. Since the lenders do not want to deal with missed EMIs and unpaid dues, housing loans are provided at low interest rates.

2) Investigating the real estate property with care

The best thing about mortgage financing is that the bank will handle it if you forget to check the property's legitimacy. Bank workers also run legal checks while reviewing the loan documentation to make sure the borrower wasn't taken advantage of. Due diligence assesses the areas where the bank approves the transaction and notifies you if your home purchase poses any danger.Compared to other types of loans, home loans are available at cheaper interest rates. To buy your ideal home,getting a home loan is preferable to using any other sort of loan. Since the lenders do not want to deal with missed EMIs and unpaid dues,housing loans are provided at low interest rates.

3) Tax Benefits With Housing Loan

Mortgage holders are entitled to income tax advantages. An excellent perk of acquiring a mortgage is the income tax deduction. It is accessible for the annual interest payments. The required payment of income tax is reduced by the amount of interest that has already been paid.

4) Home loan repayment schedule flexibility

The payback time is another characteristic that sets a home loan apart from other kinds of loans. Longer repayment terms can be requested whenever it's most convenient for you. The loan repayment period may be extended to 25 or 30 years. As the repayment time is extended, the monthly payments go smaller, which lessens the borrower's EMI burden.

5) Home Loan Balance Transfers Are Available

You can move the outstanding loan sum from one lender to another utilising a housing loan. This could be due to a number of factors, such as interest rates, service charges, unfavourable customer service, and more.

6) Capital Gains

Real estate statistics show that during the past ten years, property prices have been steadily increasing. Analysts claim that compared to the amount of interest paid, the capital appreciation of real estate investments is substantially higher. As a result, property owners benefit financially because they can now sell their properties for a bigger profit.

Home Loan Overview

A predetermined sum of money is borrowed from banks and NBFCs as a home loan or mortgage loan to pay for real estate. Apartment, new home, and plot purchases are all eligible for house loans, but you can also get one for restorations, additions, and repairs to an existing property. To ensure that the EMI amount doesn't burden you, carefully consider the house loan interest rate while selecting such goods.

People are more likely to obtain a mortgage to become homeowners as a result of skyrocketing real estate prices. The fact that the lender holds your property as a mortgage when you obtain a house loan is its most significant feature. To fully own the property, you must pay the debt in full through monthly instalments. The lender uses a home loan calculator, also known as a home loan cal, to determine the house loan's EMI.

Tax Benefits for Home Loans

Principal repayment and interest rate repayment are the two components of a home loan repayment. These components are claimed as a tax deduction or a home loan interest deduction when submitting income tax returns.

You are able to claim tax benefits for the interest paid on a mortgage under Section 80 EEA. This section provides tax incentives to homeowners on their required interest rate of up to INR 1.5 lakhs.

Particulars	Quantum Of Amount Deduction
Under Section 24	For self-occupied property: Rs. 2,00,000 For non-self occupied property: No set limit
Under Section 80 C	For self-occupied property: Rs. 1.5 Lakhs For non-self-occupied property: Rs. 1.5 Lakhs
Under Section 80 EEA	For self-occupied property: Rs. 1.5 Lakhs For non-self-occupied property: Rs. 1.5 Lakhs

Home Loan Qualification Standards

To verify and give loan borrowers as much convenience as possible, banks and finance businesses have established pre-determined eligibility criteria for house loans. Banks examine an applicant's credit history in addition to the eligibility requirements to determine creditworthiness and repayment trends.

1. Applicant must be between 21 to 65 years.

2. Salaried or self employed.

3. Annual income.

4. Collateral security.

5. Assets, financial stability and occupational continuity.

6. Residence status (Indian or NRI).

Why Home Loans Are Rejected

Following are a few of the explanations for house loan denials:

1. Unpaid obligations and other lingering commitments.

2. Address of the applicant is listed among the defaulters.

3. The applicant's age is outside the range of those who are eligible.

4. Credit score below 600.

5. Multiple rejected loan applications.

6. Regularly changing jobs.

7. Incomplete payment of outstanding obligations.

8. Lack of necessary paperwork.

How can I close an existing Home Loan?

When you have successfully repaid the entire loan amount at the end of the repayment period, or through foreclosure, a home loan can be closed.

If your payments period is over, all that's left to do is go to the lender and execute the necessary paperwork to close the loan. The lender will then give you the loan closing certificate and the property records that were maintained as mortgages during the loan approval process.

You will be required to pay foreclosure fees if you choose to return the loan amount before the loan's term is over, or if you choose to foreclose on the loan.

Your debts will be forgiven if you pay the overdue sum and the foreclosure. Your application for a foreclosure will be processed by the bank, and you will receive a certificate of loan closure.

Home Loan: Service Charges And Fees

Throughout the loan term, the following fees and charges are connected with home loans:

Processing Fees	The borrower is responsible for paying the bank or loan provider this one-time fee. To recoup the costs associated with processing the mortgage, a processing fee is assessed. It is paid in advance and is not refundable.
Application Fees	Other names for it are administrative fee and login fee. The administrative fee is assessed prior to submitting an application for a mortgage and is non-refundable. It is assessed before the loan is approved. It can be between 2,500 and 6,500 rupees. In the event that the loan is approved, the applicant will be required to pay the processing charge that will be calculated after this sum has been subtracted.
Prepayment or Foreclosure Charges	It is also known as a pre-closure charge or a closing fee for a house loan by lenders. When a borrower chooses to pay off their home loan in full before the term is up, prepayment fees may be charged. For floating-rate loans especially, many banks and financial institutions don't levy foreclosure fees. It can be between 2 and 6 percent of the outstanding loan balance.
Partial Prepayment Charges	This fee is typically assessed by banks whenever a borrower settles a portion of the outstanding balance. Home loans with adjustable interest rates are excluded from this fee, to start. The part-payment fee, if any, ranges from 0.5 to 2% of the total loan balance.
Conversion Charges	Conversion fees, also known as switching fees, are incurred when a borrower switches from a floating-rate loan to a fixed-rate loan or vice versa.
Repayment Mode Swap Charges	This fee is applied if you choose to change the manner and timing of your repayments. Every request will be charged a fee of Rs. 500.
Max Tenure of Any Home Loan	All significant lenders provide home loans with a 30-year maximum payback period. A loan term of 25 to 30 years is fairly desirable because the monthly payments are cheaper the longer the repayment period.
Maximum / Minimum Loan Amount From Bank	Banks' maximum and minimum house loan amounts vary depending on how much a property costs in accordance with market trends. Based on the location of the property and your reputation, you can borrow up to 85% of the cost of the property. You may borrow no less than 75% of the cost of the property.

Types of Home Loan

A home loan isn't just for buying a house. Home loans come in a variety of forms with varying interest rates.

1) Loan for Home Construction

Many people like building their own homes as opposed to purchasing one. The total cost of the building, the age of the property, and any additional fees all play a role in determining the loan amount in these circumstances. The ability to accept the complete loan amount at once or in instalments as needed is another perk. The loan amount determines the interest rate, which normally runs from 6.85 to 9.50 percent.

2) Home Loan

At an interest rate ranging from 9.85 to 11.25 percent, the bank will lend the borrower up to 85% of the cost of the home. Almost all banks that offer loans also offer this type of home loan.

3) Loan for Land Purchase

This is a choice that borrowers have when dealing with banks and NBFCs. Depending on the area and credit score, the bank will lend up to 85% of the land's value at an interest rate of 6.75 to 12.09 percent. Since a dwelling can be built later, after accumulating money, land is an excellent investment. In addition, compared to other loan products, land acquisition loans have cheaper interest rates.

4) Loan for Home Improvement

Your property might be renovated using a loan for home improvements. It can be utilised for many different things, including as fixing defects, painting, upgrading the interior of homes, waterproofing, and much more.

Home Loan Interest Rates

Interest rates are important when applying for loans to buy a plot of land, build a house, or remodel a dwelling. A house loan's interest rate is a set percentage that is added to the total amount borrowed.

The applicant's anticipated interest rate is significantly influenced by the present home loan interest rates. The monthly EMIs are significantly affected by even a small change in a bank's house loan interest rates. It's essential to pay attention to whether they slope, fall, or remain stable as a result. The lowest interest rates available with a convenient repayment period are frequently cited as the best home loan terms.

Depending on the applicant's credit score, all banks may have different interest rates for house loans. You must therefore thoroughly examine the house loan interest rates offered by all institutions before applying for a mortgage. In this manner, you will be able to compare house loan interest rates in-depth and determine which have the lowest rates.

Conducting thorough research on the home loan interest rates of all banks in 2023 and the banks giving lowest home loan rates is the most efficient way to compare home loan interest rates when applying for a home loan and select the best alternative.

The percentage of the loan amount that the lender charges as interest on a mortgage is known as the interest rate. The total loan amount and term play a significant role in determining this percentage-based calculation.

The best mortgage rates may change based on local governing body regulations, the borrower's creditworthiness, the size or location of the property, and the property's value.

Required Home Loan Documents

The paperwork shown below must be ready in order for you to apply for a home loan as easily as possible:

Documents for Identity Proof

PAN and Aadhar Card	Applicant's Passport
Voter ID Card	Driving Licence

Documents for Address Proof

Utility bills (electricity or telephone bill)	Salary slips of last 6 months and Form 16
Identity proof that contain address, like Aadhaar Card	Bank account statements
Income proof and employment proof

Other Documents

Passport-size photographs of the applicant

For self-employed, business continuity proof will be required (5 years)