Home Loans

What is a Home loan?
Home Loan is a Secured Loan offered against the security of a house/property which is funded by the bank’s loan, the property could be a personal property or a commercial one. The Home Loan is a loan taken by a borrower from the bank issued against the property/security intended to be bought on the part by the borrower giving the banker a conditional ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by selling the property.

Types of Home Loan
There are different types of home loans available in the market to cater borrower’s different needs.

• Home Purchase Loan : This is the basic type of a home loan which has the purpose of purchasing a new house.
  
• Home Improvement Loan : This type of home loan is for the renovation or repair of the home which is already bought
• Home Extension Loan : This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room etc.
• Home Conversion Loan : It is that loan wherein the borrower has already taken a home loan to finance his current home, but now wants to move to another home. The Conversion Home Loan helps the borrower to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.
• Bridge Loan : This type of loan helps finance the new home of the borrower when he wants to sell the existing home, this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old home & want to buy a new one, It is given till the time a buyer is found for the old home.
• Home Construction Loan : This type of loan taken when the borrower wants to construct a new home.
• Land Purchase Loan : It is that loan which is taken to purchase a land for construction & investment purposes.

Documents required in Home Loan
Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc. Following documents are required by financial institutions to process the loan application:

• Age Proof
  
• Address Proof
  
• Income Proof of the applicant & co-applicant
  
• Last 6 months bank A/C statement
  
• Passport size photograph of the applicant & co-applicant
  
  In case of Salaried
  
• Employment certificate from the employer,
  
• Copies of pay slips for last few months and TDS certificate
  
• Latest Form 16 issued by employer Bank statements
  
  In case of Self-employed
  
• Copy of audited financial statements for the last 2 years
  
• Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company
  
• Profit and loss account for the last few years
  
• Income tax assessment order

Home Loan Criteria by various banks
The borrower’s eligibility of getting a home loan depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse's income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history.

Tax Benefits in Home Loan
The home loan borrower enjoys Tax Benefits on both Interest paid & the Principal re-paid. Under Section 24(d) of Income Tax, the deduction of interest payable on the home loan is up to a maximum of Rs. 1, 50,000.
Under Section 80(c) of Income Tax, Principal amount for the repayment of loan along with other savings & investments is eligible for tax deduction up to a maximum limit of Rs. 1, 00,000.

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