15
Oct

Home loan faqs

Investing in real estate can be tricky. The decision to buy a new home or invest in one can be daunting, especially if you are a first timer at this undertaking and it includes your hard-earned funds. Well, we understand your dilemma and that is why we have curated a list of frequently asked home loan questions to give you a better understanding of the stratagem.

 1. What are the documents that I’ll need to apply for a home loan?

The documents differ from bank to bank on the basis of your loan plan and the profession of the applicant. But, here is a list of basic documents that you’ll need to apply for one:

  • Home loan application form
  • ID proofs – Aadhar & PAN card
  • Residence proof
  • Income tax returns of last 3 years
  • Bank account statements of last 6 months
  • Passport size photographs
  • Other ongoing loan letters & statements (if applicable)
  • Processing fees

2. What is the tax rebate on the home loan?

According to section 80C, you can claim tax deduction up to 1.5 lakhs for repayment of principal amount on home loan which is availed for purchase or construction of the residential property.

In Section 24B of the Income Tax Act, interest paid on a home is classified into two categories: pre-construction period and post-construction period. For self-occupied post-construction properties, a tax deduction of up to Rs. 2 lakhs can be claimed while there is no upper limit for claiming interest in case of a let out property. It should also be noted that this deduction can only be claimed from the year in which the construction had concluded.

For under-construction properties, the home loan starts immediately after availing the loan and not on the date of possession. Applicants in this category can also claim tax deduction on interest paid for up to 5 years during the pre-construction phase.

First home buyers can be benefited from The Credit Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG) to be called CLSS for MIG I and MIG II, which was initially approved for implementation for the year 2017 has been extended up to March 2020. However, the government on 14th May, 2020, announced the extension of the deadline for the affordable housing CLSS scheme for 1 year, that is, till March 2021.

First home buyers in the Middle Income Group (MIG) can still benefit from the government’s Credit Link Subsidy Scheme (CLSS). The scheme which was initially slotted from 2017 to March 2020 has now been extended for a year until March 2021.

3. What are the different types of home loans available?

There are different types of home loans available in the market to suit your needs:  

  • Land Purchases – Generally, bank lends up to 80%-85% of the cost of the land
  • Home Purchase – Almost 85% of the amount is offered as a loan by many banks
  • House Extension – These are for the ones who lack funds for extension and expansion
  • NRI home loans – To assist Non-Residential Indians to buy a property in India. The application procedure for this type of loan is different from the others
  • Home Construction – These are for those who want to construct a house on owned land

4. Who can be a Co-applicant in my home loan?

The rules of the banks state that the co-applicant must be a blood relative or must be an immediate family member to be eligible. Also, the co-applicant cannot be a minor. The most valid combination for a co-applicant is that of a husband and wife.

5. Can I transfer my home loan to another bank?

Yes, you can if you find more benefits in other banks such as a reduced rate of interest and reduced monthly EMIs.

If you wish to switch banks, visit the bank’s website and do a thorough research on their home loans. Once you are satisfied, you can initiate the transfer by paying all the necessary fees mentioned and upload the required documents. There is lesser documentation involved in  home loan transfer, and it is easier to attain when compared to a home loan.

Real estate investing, even on a very small scale, remains a tried and tested means of building an individual’s cash flow and wealth and is also considered one of the most secure ways to safeguard your family and future.  Keep investing for a safe and stacked future, but, always make sure you fully understand what you are investing in and the ultimate goal behind the investment.

Share