Things Every Buyer Must Know About Home Loans

Dev Singhraha

Relocation Expert

With the prices of properties increasing every day, taking a home loan to buy the dream house is the only way left. Home loans have become a worldwide phenomenon. But before you take a home loan there are certain things about them that every buyer must be aware of.

Facts about home loans:

To start with, there are two kinds of home loans rates: floating rates and fixed rates. In floating interest rates, the rates of interest keep changing depending on the market scenario. Sometimes it will be less, sometimes it may be higher. In case of fixed rates, the rate of interest is fixed throughout the term of the home loan.

It is a general mindset that home loans can only be taken to buy a new house. But that’s not true. Home loans can be taken to buy a second home. They can even be taken to refurbish or renovate your existing house.
Since the Reserve Bank of India has waived the penalty from pre-paying the loans on floating rates of interest, the banks cannot charge you for the same. Though they still charge a penalty ion transfer if you have taken a fixed interest. These provisions are to help the buyers prepay their home loans and get rid of the burden of loan earlier.
Home loan borrower can change to another loan lender if they are not satisfied with the services provided by the current one. However, the banks often charge some amount for transferring the loan.
Generally, home loans do not cover the charges of registration and stamp duty. It is something that the buyer has to pay by themselves from their own pocket.
Your loan eligibility and its term are dependent on your income and age. Banks do not issue loans if after the person has retired and if the loan is taken before the retirement, the repayment time is before the retirement.
Banks not only help you to buy the house of your dreams but also help you availing the home loan tax benefits. Under the Income Tax Act, a borrower can not only enjoy the tax benefit for the principle amount but also for the interest amount though there are certain limitations to it. Under Section 80C, the borrower can claim for deductions in the principal amount up to Rs 1.5 lacs. Under Section 24, the borrower can claim the deduction on the repayment of interest component up to Rs 2 lacs.

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