For someone who is looking to buy a property, home loans is an intelligent option in India. It gives you ownership of the house in easy installments plus it gives you certain tax benefits. Owning a house is a major decision both financially and emotionally. Purchase of real estate after all is an investment, giving you good returns in the long run. For this you must choose the right type of home loan with the best offers and interest rates. There are certain facts about the Income Tax Act in India you should be aware of as well.
Home loans can cover the following – purchase of land, renovation, extension and construction. The following are different types of loans banks in India offer:
1. Home Purchase Loan: This is the commonly sought loan. It is used when you buy a new apartment or house.
2. Home extension loan: This loan can be taken up when you need to extend your current apartment or house further like for example, an extra bathroom, another room etc.
3. Home construction loan: This is taken up when you want funds to construct a new home on an existing property. This loan can sometimes be confused with home purchase loan but you should know that the terms and conditions of this loan are very different from purchase loans.
4. Home conversion loans: This loan is used when you want to want to move to a new home and need the extra funds for it. This eliminates the need of prepayment of the previous loan.
5. Bridge loans: This is for that time when you are selling the old house and buying a new house. The loan amount helps you to buy the new house while you are waiting to sell the old home.
6. Home Improvement loans: This loan is opted for when you are looking to get some renovations done in your house. Repair works are also included in this loan.
The tax benefits of loans in India:
It requires a huge sum of money to buy a new home. To make the financial burden lighter on the common man, the Government gives some tax benefits on home loans. Here are a few things you should know about them:
1. Purchase loans and construction loans can attract tax benefits. The interest as well as principal components get these benefits.
2. Repair of property is also eligible for interest deduction.
3. Any home or construction loan taken on or after April 1st, 1999 is eligible for deduction of up to Rs.1.5 lakhs. Before that date, Rs. 30,000 is deducted.
4. The deductible can take place only once the house has been constructed or bought. It can take place as five installments. It takes place over five years. The first one is deductible in the first year the construction is finished.
Home loans – The situation in India
There are more than a few banks offering home loans in this country. Depending on the EMIs you can make your choice. There is quite a competition between lenders. You can apply online as well as offline for the home loan.
Even though there are many lenders, you must make your choice for home loans lender wisely as it is a huge financial investment and decision.