Home Loans an overview

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Anupama Nair



It is everyone’s dream to own a home, and not everyone has the funds to pay completely, hence home loans have become the most popular option these days. By availing a home loan, your dream is just a step away. It becomes important for you to learn the process of home loans and then you can choose the best deal available in the market. Borrowers can avail many different types of loans.

The term home loan refers to a loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal (amount borrowed) and interest and the property serves as collateral to secure the loan.

Home loans come in a variety of forms. You have the option to choose the tenor of the loan. Stretching payments over more years may reduce the monthly payment, but it also increases the total amount of interest that the borrower pays over the life of the loan. With a fixed rate loan, the interest rate stays the same for the entire term of the loan, as do the borrower's monthly payments toward the loan. Nowadays, most lenders in India do not offer fixed rate loan. With a variable loan, the interest rate is fixed for an initial term, after which it can change periodically based on prevailing interest rates. The rate the lender provides in the beginning is often a below-market rate, which can make the loan more affordable in the short-term but possibly less affordable long-term if the rate rises substantially.

There are many types of home loans provided in India. Here are a few:

Home Construction Loan

Home Construction Loan is taken when you have a vacant plot and want to construct a home. This loan is much popular in villages and small towns where vacant land is available, but in cities like Mumbai and Delhi where space is premium, very few go for this loan.

Home Extension Loan

If you already have a home and you would like to extend the loan, this is the perfect option for you to extend a room or build a floor.

Home Improvement Loan

It helps when you are thinking of renovating and repairing your old home.

Balance Transfer

You can do a Balance Transfer of the Home Loan to another lender, if you are not happy with the interest rate or services of the lender. Balance Transfer will help you a lot as the new lender will provide a much lower interest.

Why home loan?

Tax Benefits

The foremost  benefit of a home loan is the Income tax benefit, you can claim on the Interest and Principal repayments. You can claim up to 1.5 lakhs on the principal repayments and up to 2 lakhs on interest.

Lower Interest Rates

The interest of home loan is much lower than other loan type in India. If you are facing a financial difficulty, you can go for a top up on the existing home loan.

Long Repayment option

Unlike personal loans, home loans come with longer tenor, up to 30 or 35 years depending on the age of the applicant.

No prepayment penalty

Unlike other loans, there is no pre-payment penalty if you make a part payment of your home loan. You can make part payment when you have a lumpsum amount. You can make your home loan much easier to pay.

Balance Transfer Option

You ca easily transfer the home loan from one lender to another, that too with much lower interest rate.


  • CIBIL Score above 750
  • Age
  • Employment type
  • Annual CTC
  • Residency Status

Documents Needed


  • Pan Card
  • Aadhar Card
  • 6-month bank statement
  • Check of processing fee
  • 3-month salary slip
  • Form 16

Business Person:

  • Pan Card
  • Aadhaar Card
  • 6-month bank statement
  • Cheque for processing fee
  • Proof of Business
  • ITR/Form 16 for 3 years
  • 3-year profit loss statement

After collecting all documents from you, the bank will review your application and decide to either approve or reject your loan.









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