Benefits and eligibility of Home Loans

A home loan is far better than other loans because it helps you save tax and build an asset

You can obtain a home loan by pledging collateral. A home loan is repaid through EMIs (equated monthly instalments), and after the completion of the repayment procedure, the bank transfers the property's title back to you. The lender of the home loan – a bank, NBFC (Non-Banking Financial Company), or any other financial institution – possesses the legal right to recover the outstanding loan amount by selling the property if the borrower is unable to repay the dues.

Features and benefits of home loans

1. Home loans finance a large part of a property's market value

A home loan, offered by a bank or a housing finance company, finances 70% to 90% of a property's cost. You must pay the remaining amount of the property's market value as a down payment. To know the amount the bank will finance via a home loan and the amount you must pay as a down payment, you can consult IDFC FIRST Bank's home loan EMI calculator.

2. A home loan can help you purchase any property

You can use a home loan to finance your purchase of any property. It includes purchasing a piece of land, a property under construction, a property that has been used before, or a new property. A home loan can also finance the remodelling and renovation of your property.

3. You can choose your preferred type of interest rate

As a home loan borrower, you can choose between two interest rates offered by banks and housing finance companies – a fixed interest rate and a floating interest rate. A home loan availed at a fixed interest rate has an interest rate that remains unchanged throughout the tenure of the loan. It means that regardless of the volatility of the real estate market, your home loan EMI remains the same.

On the other hand, a floating interest rate changes according to the changing applicable interest rates in the real estate market. Hence, depending on the increase or decrease in the demand for home loans in the market, your home loan EMI will keep changing. If you have opted for a floating interest rate, you must remain updated about your current home loan EMI rate.

4. Home loans offer flexible repayment cycles

The repayment cycles of home loans can last as long as 30 years. The monthly EMI of a home loan with a longer tenure is less and, hence, more affordable.

5. Home loans come with tax benefits

Among the many benefits of availing yourself of a home loan is the chance to save on taxes.

• Home loan borrowers are entitled to a tax deduction of up to ₹1.5 lakh on contributions made towards their home loan's principal amount under Section 80C of the Income Tax Act, 1961.
• Home loan borrowers are entitled to a tax deduction of up to ₹2 lakh on contributions made towards their home loan's interest component under Section 24 of the Income Tax Act.

What are the eligibility criteria for a home loan?

Some factors affecting your home loan application are your present age, the number of working years remaining, and your monthly income. The following are the eligibility criteria for salaried individuals who wish to apply for a home loan:

• Individuals must be between 21 and 60 years.
• Individuals must have at least three years of experience.
• The borrower must earn at least ₹1 lakh per annum.
• The home loan tenure duration must be between 12 months and 360 months.

Self-employed individuals must satisfy the following criteria:

• The borrower must be a resident Indian.
• They must be between 23 and 70 years of age.
• They must have a minimum of four years of business continuity.
• They must earn at least ₹1.5 lakh per annum.
• The home loan tenure duration must be between 12 months and 300 months.

You can avail of a home loan from IDFC FIRST Bank. The bank offers customised terms and fast approval to help you build or purchase your dream home. You can also use the home loan eligibility calculator and home loan EMI calculator to gauge your finances.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.