Things You Should Know About Home Loan

A house is a large investment, and most of us will need financial assistance – in the form of a home loan – to make the purchase. A housing loan is a wise decision because it allows you to realise your ambition of owning a home without putting your finances at risk. 

A home loan is a line of credit used by a buyer to finance the purchase of a property. Many lenders in India provide house loans with the option of repaying them in equivalent monthly instalments (EMIs) over a period of 25 to 30 years (depending on the loan tenure you opt). In addition, Indian financial institutions will lend you up to 80% of the property’s value. If the property is worth more than 20 lakhs, certain lenders would finance up to 90% of the value. 


The amount of home loan you are eligible for is determined by a number of factors, including income, age, credit score, loan tenure, and so on. While income plays a significant factor in determining the loan amount, one can always include your spouse’s income as a co-applicant. Before approving the loan, the appraised value of the property is taken into account. Banks often set loan amounts at 70-80 percent of the property’s value. 

The loan’s eligibility can also be improved by extending the loan’s term, which lowers the EMI. 


Along with the main component, interest is incorporated into the equivalent monthly instalment (EMI). The interest is calculated on a declining balance basis, which means that with each EMI payment, the principal outstanding decreases. 

Home loan interest rates are currently as low as 6.65 percent per year. 3. TYPES OF HOME LOANS 

Lenders offer home loans, not only for buying a house but also for a variety of other purposes. Some of the home loans open for the people who are hunting down another home or building a house include :- 

  • House Improvement Loan Or House Extension/Expansion Loan 
  • Adjustable/Floating Rate Loans 
  • Land/Plot Purchase Loan 
  • Combination Loans 
  • Bridged Loan 
  • Fixed Rate Loan 
  1. EMI 

EMIs, or Equated Monthly Instalments, are a method of repaying debts that is both systematic and convenient. The amount owed (the amount borrowed plus the amount owed in interest) is spread out over the loan’s term, with consistent monthly payments. An EMI is the term used to describe the monthly amount that must be

repaid. Applicants are given an amortisation schedule with appropriate balance amounts per year to distribute the amount paid towards interest and principal. 

  1. TENURE 

The term “tenure” refers to the length of time it will take a borrower to repay the loan amount plus interest. The minimum term for a home loan is usually two years, but it can be as long as 30 years depending on the lender. 


To acquire a home loan, an applicant must provide a number of documents establishing their KYC, the antecedents of the property they seek to purchase, their income background, and so on, depending on which customer group they belong to (salaried/professional/businessman/NRI). 

The documentation necessary differs from one bank to the next. 


In the event of an unanticipated circumstance, a house loan insurance plan is a programme in which the insurer will settle the outstanding Home Loan amount with the lender or the bank. Some extensive home loan insurance plans cover the borrower, the house, and all of its belongings. The cost paid for home loan insurance is deductible. 


If the loan is obtained jointly, each loan holder can claim a deduction in their tax returns for house loan interest up to Rs 2 lakh and principal repayment under Section 80C up to Rs 1.5 lakh. To be eligible for this deduction, one must also be co-owners of the property lent. 

Buying a home is a significant step, but it’s also the most rewarding experience you’ll ever have. A home loan is one of the most effective strategies to assist you in purchasing your own home.

Read Also:- Top 6 Best Credit Cards For Online Shopping in India

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