Home Loan India

 

 

The Indian real estate and property sector has emerged as an important contributor to the nation’s economy. According to the India Brand Equity Foundation, the sector accounted for about five percent of India’s GDP in 2008-2009. This real estate boom has significantly contributed to the growth of the Indian home loan industry, with several nationalized (government owned) and private banks capitalizing on the opportunity.[br]

 

Home Loan India: Application

Obtaining a home loan is as easy as filling an application form. Although the application procedure and requirements vary from bank to bank, the common requisites are:

 

• Proof of income: This includes copies of income tax returns, salary slips and statements of all active bank accounts, which reflect salary or business income.

• Age and address proof: This may include a school leaving certificate, driving license, passport, ration card, PAN card or an election commission’s card.

• Employment details: This includes the company profile, including information about its customers, competitors, branches, number of employees and annual turnover.

 

A home loan is approved only after reviewing these details are reviewed.

 

Home Loan India: Refinancing

Home loan refinancing is an excellent option if the interest rates have significantly reduced since the original home loan was obtained. This helps to secure lower EMIs or monthly installments.

 

For refinancing a home loan in India, a borrower is required to furnish the following information:

 

• Outstanding loan amount

• Current EMI

• Number of remaining installments

• Prepayment fees (if any) 

Generally, a bank does not charge any prepayment fees, though it may charge a small amount towards processing the request. 

Home Loan India: Tax Benefits[br]

A home loan is the best way to save taxes for a long duration. In India, a home loan borrower is eligible for several deductions under the Income Tax Act of 1961.

 

Important sections of the Act pertaining to home loans are: 

• Sec 24(b): This caters to deductions in favor of interest paid on a home loan. Maximum deductions under this section can take up to Rs.1,50,000/- on the total tax liability.

• Sec 80(c): It allows a deduction on the payments towards a home loan principal, up to Rs.1, 00,000.

 

Tax benefits under both the sections can be claimed only when payments towards a home loan are complete. Failing on EMI payments disqualifies a borrower from the tax benefits. Besides, a husband and wife can share income-tax deduction benefits against the same home loan.