A home loan is a financial product that helps individuals purchase, construct, or renovate a residential property. Home loans offer long repayment tenures and competitive interest rates, making home ownership affordable for many. Below is a detailed overview of the features, benefits, eligibility criteria, and required documents for a home loan.
Features of a Home Loan
Loan Amount: Covers up to 75%-90% of the property’s market value, depending on the lender.
Interest Rate: Can be fixed or floating; ranges between 6.5% and 9% annually (varies by lender).
Repayment Tenure: Flexible tenures ranging from 5 to 30 years.
Low EMI Options: Extended repayment terms reduce monthly installment burdens.
Prepayment Facility: Allows partial or full repayment before the tenure ends, often with minimal or no charges.
Tax Benefits: Borrowers can claim deductions on principal and interest under sections 80C and 24(b) of the Income Tax Act.
Balance Transfer Option: Transfer the outstanding loan to another lender at a lower interest rate.
Top-Up Loan: Additional funds can be availed over the existing home loan.
Joint Loan Option: Applicants can co-borrow with family members to increase eligibility.
Customized Schemes: Special schemes are available for women borrowers, senior citizens, and first-time buyers.
Benefits of a Home Loan
Makes Home ownership Affordable: Helps individuals buy or construct homes without paying upfront.
Financial Security: Investment in real estate provides long-term stability.
Tax Savings:
Up to ?1.5 lakh deduction on principal repayment (Section 80C).
Up to ?2 lakh deduction on interest repayment (Section 24b).
Builds Credit Score: Timely loan repayments improve the borrower’s creditworthiness.
Appreciation Value: The value of the property appreciates over time, increasing its investment potential.
High Loan Amount: Sufficient funding is available for high-value properties.
Multiple Purposes: Can be used for buying, constructing, or renovating a property.
Eligibility Criteria for a Home Loan
Eligibility criteria vary by lender, but typically include:
Age:
Salaried individuals: 21 to 60 years.
Self-employed individuals: 21 to 65 years.
Income: Minimum monthly income of ?25,000 (varies based on location and lender).
Employment:
Salaried employees with stable jobs (minimum 2-3 years of work experience).
Self-employed professionals or business owners with a consistent income record.
Credit Score: A CIBIL score of 750+ is ideal for approval and better interest rates.
Loan-to-Value Ratio (LTV): Lenders provide up to 75%-90% of the property value.
Property Type: Property should be legally approved with clear titles.
Repayment Capacity: Based on income, liabilities, and credit history.
Documents Required for a Home Loan
Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License.
Address Proof: Utility Bills, Rent Agreement, Passport, or Aadhaar Card.
Income Proof:
Salaried: Last 3 months’ payslips, Form 16, and latest bank statements.
Self-Employed: Audited financial statements, ITRs (last 2-3 years), and business proof.
Property Documents:
Sale Agreement, Title Deed, and Encumbrance Certificate.
Approved Building Plan and NOC from the builder/society.
Bank Statements: Last 6-12 months.
Photographs: Recent passport-sized photographs of all applicants.
Loan Application Form: Duly filled and signed.