Home Loan: Overview
A home loan is a type of secured loan provided by banks or financial institutions to help individuals purchase, construct, or renovate residential properties. The property itself serves as collateral for the loan.
Advantages of a Home Loan
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Home Ownership
Enables individuals to buy a house without having to pay the full cost upfront. -
Tax Benefits
Under the Indian Income Tax Act (for example):Section 80C: Deduction on principal repayment up to ₹1.5 lakh.Section 24(b): Deduction on interest paid up to 2 lakh per year. -
Low Interest Rates
Home loans usually offer lower interest rates compared to other types of personal loans. -
Long Tenure
Loan tenure can go up to 30 years, making monthly installments (EMIs) more affordable. -
Capital Appreciation
Buying property can be a good long-term investment due to appreciation in property value. -
Balance Transfer Facility
Allows you to transfer your loan to another lender offering better terms.
Eligibility Criteria for a Home Loan
(Varies slightly between banks or NBFCs)
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Age:Salaried: 21 to 60 years Self-employed: 21 to 65 years
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Income:Stable monthly income with sufficient repayment capacity
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Employment Status:Salaried individuals (with at least 2-3 years of work experience)Self-employed professionals/businesspersons (with a stable business history)
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Credit Score :A good credit score (usually 700+) enhances approval chances and lowers interest rates.
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Property Documents :The property should be legally and technically approved by the lending institution.
Documents Required for a Home Loan
1. Identity & Address Proof (any one from each category)
Aadhar Card
PAN Card
Voter ID
Passport
Driving License
2. Income Proof
For Salaried Individuals:
Salary slips (last 3–6 months)
Form 16 or Income Tax Returns (last 2 years)
Bank statements (last 6 months)
For Self-Employed Individuals:
ITRs (last 3 years)
Business license or registration proof
Profit & Loss statement, Balance Sheet
Bank account statements (6–12 months)