Home Purchase Loans
What is Home Purchase Loan:
Home Purchase Loan is a secured loan that is offered for the purpose of purchasing a new home. The home purchased is used as security by the lender against the loan amount issued. It is always advisable to take a loan which can be serviced easily. A very huge loan can affect your credit history adversely.
Key Features:
- A Home Purchase loan has to be repaid in Equated Monthly Installments (EMI) for completed homes.
- A Pre-EMI has to be paid for a partially disbursed loan, mostly in case of under construction properties.
- The tenure is usually for 20 years
- It is available to salaried and self employed people.
- The home purchase loans can be taken at fixed interest or floating interest rates.
Eligibility criteria:
The minimum age for applying for a home purchase loan varies from 18 to 21. Different loan providers have different minimum and maximum age limits. Other eligibility factors that the loan provider takes into account are as follows:
- Salary/Income
- Credit History
- Profession
- Location of property
- It is said that your monthly EMI should fall between 30-40% of your gross monthly income.
Basic Documents Required:
The documents required by each loan provider may vary, but in general all home purchase loan providers will need the following documents to process your loan.
- Age Proof (like PAN card, Ration card, Passport, etc)
- Income proof (6 months’ salary slip/income statement)
- Bank account statement(the previous 3-6 months)
- Current address proof
- Photo identification proof (like Passport, driving license)
- Income tax returns for the last 3-4 years.
Tax Implications:
- The IT act of India, under section 24 allows deduction on interest paid towards loan on the property.
- Such a deduction is allowed on an accrual basis on the actual borrowed capital and not a notional capital.
- The bank or the lender has to issue a certificate with details of the interest paid during the assessment year.
- If the property is under construction then the interest paid is not applicable for deduction for that year. The entire pre- EMI paid, though, can be shown in five equal installments, in subsequent years.
- The amount paid towards the repayment of principal is also entitled for deductions under 80c of IT Act, upto a maximum of Rs.1 Lakh per year. This amount, though is eligible for deduction, if paid in the financial year only and not on an accrual basis.
- In case of a second property, only section 24 applies and the section 80C deduction is not applicable. The rental income (annual value) from the first or second property (whichever is rented out) has to be added to the income.
- If the amount is borrowed jointly by two or more people, the deduction can be availed, on the same property by all them, to the extent of the loan amount borrowed in their respective name, and thereby the contribution by them towards the repayment of the loan.
Home Loan Providers:
The top home loan providers in India include SBI, HDFC, ICICI, LIC Housing Finance and Axis Bank.
Contributed By: B C Shetty & Co |
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Established in 1985 by Mr.Chandra Shekar Shetty, operating from 3 branches, B.C.Shetty & Co. is a firm dedicated to serving their clients with utmost transperancy by offering qualitative professional service. | |
