What Exactly is a Mortgage ?

For most people, owning a home is a huge accomplishment and a dream come true. As a homeowner, you can customise your space to meet your specific needs and preferences. Building your dream home, on the other hand, can be an expensive endeavour. To that end, a home loan can provide financial assistance and supplement your budget. Continue reading to learn more about what a housing loan is and how it can help you buy your dream home.

What exactly is a home loan in India?

by banks and financial institutions. With the loan amount offered, such banks or financial institutions can help you increase your budget to purchase a house. You can get the loan if you meet the home loan eligibility criteria for a specific tenure. You must repay the loan amount borrowed plus interest at predetermined interest rates over the term of the loan. The home loan is repaid in monthly instalments, just like any other loan. Today, most banks offer home loans that not only assist you in purchasing ready-made homes but also in the construction of a house from the ground up. You can also look for home loans for renovation.

What are the advantages of a home loan?

When you choose a home loan, you will receive the following benefits:

Taxation: A home loan allows you to deduct interest and principal payments from your taxable income. Section 80C of the Income Tax Act of 1961 allows you to claim up to INR 1.5 lakh on principal repayments and up to INR 2 lakh on interest repayments. You can also get other tax breaks with a home loan.

Interest Rate: In comparison to other types of loans, the interest rate on a home loan is relatively low. In addition, if you run into financial difficulties, you can apply for a top-up loan in addition to your existing home loan.

Due Diligence: When you apply for a home loan, banks conduct a legal inspection of the property to ensure that the documents are valid and the title is clear. This step can protect you from being duped, and passing it can validate your property.

What are some critical factors to consider when applying for a home loan?

Apart from understanding what a home loan is, it is also important to understand how to choose the best option among the various types of home loans available. To apply for the best home loan for your needs, you must consider the following factors:

Interest Rate: Make certain you understand the type of home loan interest rate being offered to you. In contrast to a fixed interest rate, which remains constant throughout the term, a variable interest rate can change.

More information on fixed and floating home loan interest rates can be found here.

Tenure is an important variable that determines the EMI amounts payable each month on the due date. Knowing the exact tenure will allow you to plan your finances accordingly.

Application: Choosing a home loan with a simple application process and minimal documentation is advantageous. You should ideally choose a home loan that allows for online applications and quick disbursements.