A house loan refers to the financing you can get from a financial institution to purchase real estate. It is also known as a mortgage loan and is backed by your property as collateral. There are many types of house loan options that can be customised to meet your requirements.
House loans are granted for a tenure that is dependent on the loan amount. You can get financing for 80%-90% of the house’s value. The financial institution which grants the loan may also charge a processing fee.
Now that you know what is a house loan, read on for some more details.
Points to Remember:
A home loan provides financial support for purchasing different properties, like apartments, plots and bungalows, among others. You can also use a home loan to purchase under-construction properties. It also provides funding for renovating or expanding your home according to your preferences.
Opting for a home loan is a smart financial decision since it offers financial support for purchasing a property. Most home loan lenders offer competitive interest rates and allow you to choose a repayment tenure, making repayment affordable and manageable. You can choose to repay in monthly or even quarterly EMIs. You also get tax benefits on your home loan under Section 80C and 24B of the Income Tax Act.
A home loan and a house loan are the same. They refer to the loan you can get to purchase a residential property. These terms are used interchangeably.
Your salary is an essential component that lenders assess while approving your home loan application. This is because your salary indicates your financial standing and your ability to repay your home loan EMIs. Your salary is divided into two components, your basic salary and your allowances. Lenders consider your basic salary while approving your home loan.
For instance, say your monthly salary is ₹50,000 and after deducting the allowances, your basic salary is ₹35,000. Lenders will consider this amount while approving your home loan. To get a better idea of your home loan EMIs, use the home loan calculator and plan your application better.