Home Loan FAQs You Must Know

Buying a home is one of the biggest dreams in many people's lives. After all, a roof above the head, a bit of ground beneath the feet, is what all aim for. A place called home is something you earn. But properties come at a price, often beyond our liquid cash range. What to do then?

Apply for a home loan. Do you have too many queries? 

Here, we created some common FAQs to help you stay informed. 

What Is A Home Loan?

A home loan is a type of loan borrowed from a financial institution to purchase, build, or renovate a house. You must repay this amount over time, typically in monthly installments, along with interest.

Who Can Apply? 

Anyone with a steady income (salaried or self-employed) can apply for a home loan. However, you should also be at least 21 years old and have a good credit history. Lending institutions generally check fundamental details, including your age, income, credit score, job stability, existing debts, etc. 

How Much Loan Can I Get?

It depends on your income and repayment capacity. Other important factors taken into account include your age, number of dependents, assets and liabilities, stability of your occupation, and other such things. 

What Is A Down Payment? 

The amount you pay from your pocket before the loan kicks in is your down payment. A higher down payment means you will need a smaller loan, which can reduce your EMI and interest burden. 

What Is EMI? 

EMI stands for Equated Monthly Installment, which includes the loan amount and the interest. It's the fixed amount you pay the bank every month to repay your home loan. 

What Does The Market Value Of The Property Mean? 

Market value is the estimated price you can obtain by selling the property based on the prevailing market conditions.

Can I Prepay My Home Loan? 

You can prepay your home loan partially or fully before the term ends. It can reduce your interest burden. Some banks may charge a small fee for prepayment, especially if you have a fixed-rate loan, but many also offer a Free prepayment option. 

What Happens If I Miss An EMI?

Missing one EMI can bring the late payment charges. Moreover, if you miss several payments, it can harm your credit score and lead to legal action. Always inform your bank if you have a sudden financial crunch. Some institutes may also offer flexible options. 

Are There Any Tax Benefits?

Yes. You will get tax benefits on both the principal and loan amounts under the Income Tax Act of 1961. But the tax benefits may vary from year to year. Therefore, it is better to consult the loan counsellor about the tax benefits you can get. 

What Security Will I Have To Provide?

The property you buy often works as security or collateral for your home loan. It means the lending institution holds a legal claim on your home until you fully repay it. 

Does The Property Have To Be Insured? 

You must have insurance for your property for fire and other hazards during the loan tenure. 

Taking a home loan is a big commitment, but it's also a big step toward your dream of owning a home. Thus, you must always compare offers from different banks, read the terms and conditions, and ensure you are comfortable with the EMIs. With the correct information and planning, your home loan journey can be smooth and stress-free. 

Conclusion

Are you planning to buy your dream home? After all, we all work for it. Home is something built and earned. It is always our dream to own a home. Own your dream home with a home loan.