Simplifying Home Ownership By Answering Your Questions

What tax benefits can be availed on home loans?

For a self-occupied property purchased or constructed using borrowed funds, interest paid on the home loan is eligible for a deduction of up to R2,00,000. In the case of a rented property, the entire interest amount paid can be claimed as a deduction.

Additionally, repayment of the principal amount qualifies for a deduction of up to ₹1,50,000 under Section 80C, which also includes stamp duty and registration charges.

What does the reducing balance method of interest calculation mean?

Under the reducing balance method, interest is calculated only on the outstanding loan amount after deducting the principal already repaid. This means you pay interest only on the unpaid principal and not on the original loan amount.

What is a floating interest rate?

A floating interest rate—also known as a variable or adjustable rate—is an interest rate that changes periodically based on market conditions, rather than remaining fixed throughout the loan tenure.

Do banks charge a processing fee for home loans?

Yes, most banks levy a processing fee, typically ranging between 0.25% and 0.50% of the loan amount. This fee covers administrative and loan maintenance costs and is non-refundable once paid.

How can I apply for a home loan?

You can apply for a home loan by submitting a formal application to a housing finance company or bank. Along with the application, you’ll need to provide personal and financial details so the lender can assess your loan eligibility.

What documents are generally required for a home loan application?

Commonly required documents include identity proof, address proof, age proof, educational or professional qualification details, employment information, bank statements, income proof, PAN card, property-related documents, and an auditor’s report where applicable.

How much home loan can one avail?

The loan amount you are eligible for is determined by factors such as your age, income structure, existing liabilities, monthly cash flow, and overall expenses, as per the bank’s lending criteria.