It goes without saying that buying a house is one of the biggest financial transactions of one’s life. It goes beyond selecting the right property. It is about affording the purchase with little to no impact on other expenses of your life. This is essential to enjoy a satisfying life with no constant stress over repayments. Apart from being an excellent investment, having your own home is a way for people to meet their needs, fulfill their wishes, and enjoy a life of security. However, with the growing real estate prices and current scenario, it has become difficult for people to people to fulfill this dream without burning a huge hole in their pockets.
To combat this problem, home loans have emerged and are constantly helping the vast masses of the country to fulfill their dreams of buying a house without making a massive one-time payment. In this article, we’ll help you find out everything about home loans!
What are home loans exactly?
Home loans are a particular amount of money that an individual borrows from an NBFC or bank at an interest rate that is decided before-hand and has to be paid with an EMI every month. The property is taken as a kind of security or guarantee by the financial company. If the borrower fails to repay the dues, the financial company has the legal rights to recover the outstanding amount by the sales of the given property. Home loans in India have grown fairly popular in recent times.
What is the eligibility?
Before starting the home loan process, one has to determine their total eligibility – which mainly depends on their repayment capacity, income, assets, liabilities, and stability of employment, among other things.
Let’s talk about a few features of Home loans!
One of the best features of a home loan is the long repayment tenure that a borrower can avail, which can go up to 30 years. It provides the opportunity for borrowers to reduce their equated monthly installments by extending their period of tenure. This is helpful as it ensures that the borrower is not too overwhelmed by the high EMI and can manage their ongoing expenses smoothly too.
- Tax benefits
In response to the rising necessity of people to have their own homes, the Government of India is providing great tax deductions on the principle amount as well as the rate of interest. This is done to encourage the maximum number of people to buy their dream house. Under section 80C of the Income Tax India Act, the borrower is claimed a tax deduction of Rs. 1.5 lakh in a single financial year. Apart from that, there is also a deduction of Rs. 2 lakh allowed but the borrower can’t use it if the property is under construction.
- Ability to switch lenders
If the borrower is not satisfied with their existing lender, they have the power to switch to another lender. It comes handy when the borrower had opted for fixed rate home loans and want to switch to floating rate to save on the interest cost in the future. If their current lender does not agree to that, they have the option to refinance their loan by switching to another lender. Furthermore, if the existing lender does not provide great service, is slow in reacting to feedbacks, and has bad customer care service, then one has every right to refinance the loan to another lender that provides good services.
It is essential to do some market research before deciding on a financial lender so the need for refinancing doesn’t arise. Many digital NBFCs are moving ahead in the game and providing flexible EMI plans with customizable repayment plans. One such modern-day NBFC is Clix Capital, which provides hassle-free home loans with fast approvals and minimal documentation.