Benefits of Home Loan

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An exhaustive guide on Home Loan features and benefits

Key Takeaways

• Buying your own home is easier than ever with Home Loans.
• You can repay your Home Loan in flexible tenures lasting up to 30 years.
• You can enjoy tax benefits under Section 80C and 24B on Home Loans.
• You can use the loan to buy new, pre-owned, and under-construction properties.
• You can choose between fixed and floating interest rates on Home Loans

Buying a house is an investment worthy of its name. It is akin to acquiring an asset that only keeps appreciating in value. But, with the ever-escalating property prices, most people turn to Home Loans to fulfil their dream of becoming homeowners. Taking on a Home Loan comes with a whole lot of benefits. Let us assess the many benefits of taking Home Loan in this article.

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Advantages of Home Loan

Following are the benefits of Home Loan.

High loan Value

Banks typically offer to finance 70% to 90% of the market value of the property as a Housing Loan, depending on the city or state of your residence. The rest, you must pay as a down payment. You can use the Home Loan EMI Calculator to compute the loan amount you can obtain and the down payment you need to pay.

Multiple End-uses

You can apply for Home Loans to purchase any property you like. For instance, you can utilise the loan amount to buy a piece of land, construct a new house on land you own, purchase a brand new, pre-used, or under-construction property, etc. You can even renovate or remodel your home with funds obtained through a Home Loan.

Choice of interest type

With Home Loans, you can choose between fixed and floating interest rates. If you opt for a fixed interest loan, your EMI remains the same throughout the loan tenure. Conversely, if you opt for a floating interest Home Loan, your EMI depends on the applicable interest rates in the real estate market. During a market where the demand for Home Loans is low, your floating interest Home Loan EMI may reduce significantly.

Flexible Repayment Tenure

You can repay your Home Loan in tenures lasting up to 30 years. Longer tenures translate to lower and pocket-friendly Equated Monthly Instalments (EMIs). This flexibility makes Home Loans an indeed attractive option.

Tax Benefits

Some critical advantages of Home Loans include their tax benefits.

• Under Section 80C of the Income Tax Act, 1961, you can enjoy tax benefits of up to INR 1.5 Lakh on principal repayment.
• Under Section 24, you can claim up to INR 2 Lakh as tax deductions on the Home Loan interest repayment component.
• If you are a first-time homeowner, you can get a tax benefit of up to INR 1.5 Lakh under Section 80EEA. The Home Loan must have been sanctioned between 31^st March 2019 and 1^st April 2022.

Minimal Prepayment Charges

Another advantage of Home Loan is that banks typically do not levy prepayment charges if you choose to repay your loan before the stipulated tenure. Prepayment is only applicable if you close your loan early during the loan repayment period or opt for floating interest Home Loans.

Final Note

Home Loans are a convenient way to fulfil your dream of buying a property. However, with so many lenders in the market, it can be challenging to choose the right one. Remember to shop across different lenders before finalising your Home Loan provider.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.