What is home loan?

Its a loan taken to purchase a home (may be an under construction property), or to purchase a piece of land, or to renovate/ extend an existing home.

How long could my home loan tenure be?

Home loan tenure can be up to 30 years. Longer the tenure, lower your EMI will be. However if you stretch your loan tenure, you will end up paying more in interest amount and your loan will be costly.

How much loan amount can I avail?

Usually the banks provide 80% to 85% of your property value as loan and rest you will have to provide as down payment. Moreover, the banks decide the amount of loan by taking into account your income, age, number of dependents, your spouse’s income (if any), your credit history and your repayment capacity. Use the loan affordability calculator to determine how much you should really borrow based on the monthly payment you can make.

How much should my monthly EMI be?

It depends on your monthly income and expenses. Usually, the banks advise you to restrict your EMI to 35% to 45% of your monthly income so that you can pay this debt without feeling a pinch in your wallet. Before borrowing, determine how much EMI you can afford and understand the circumstances that can impact your EMI.

How can I enhance my home loan eligibility?

By clubbing your income with your spouse or with your earning parents / children, you can stretch the loan available to you. Different banks have different rules and restrictions regarding with whom and how you can do this. Loan available to you depends on the value of your property also, as the banks give only 80 to 85% of the value of the property. Further, if monthly EMI is the limiting factor in expanding your loan then you can stretch your loan tenure to bring down the EMI.

What is the eligibility criteria for home loan?

Mostly it is your repayment capacity which is depending upon other factors such as your age, your monthly income and expenditure, your credit history, value of the property etc.

What is refinancing?

Refinancing means taking loan from a bank to pay off the loan taken from another bank. You may opt for this if you are not happy with the service of your existing bank or if there is a chance of getting lower rate of interest from another bank. Banks and HFCs may reduce (or completely waive off) the prepayment penalty if you pay the loan from your own source of funds and may charge a penalty if you pay it by taking a loan from another lender depending on the current loan scheme (i.e, floating or fixed interest loans).

Do I need an insurance for my home?

Yes, you need to insure your house from various vulnerabilities such as fire and any natural hazards as per the requirements of the bank. The bank will be the beneficiary of the insurance during your home loan tenure.

What are the tax benefits on home loan?

The borrower will get tax benefits on principal as well as interest component.  You can claim deductions on Rs. 1,50,000 (or actually paid whichever is less) paid towards interest and Rs. 1,00,000 (or actually paid whichever is less) paid towards principal amount in a fiscal year. For more read our posts on home loan tax benefits and exemptions.

Where can I apply for home loan online?

17 responses to “Home Loan FAQ

  1. Dear sir,

    I had applied for SBI home loan, Please can you suggest that should I take the home loan insurance. And what are the benefits of this insurance? And what question I should ask the bank for this loan or what should be benefits available from this loan?

    Alok Kumar

  2. i have taken loan in 2012. now for year 2014-15 income tax calculation what is limit for installment and principal amount according to new budget?

  3. I am having home loan from SBI from last 5 years and I am paying installments regularly, i want to construct a second floor, can i enhance the home loan

  4. If i take 1 home loan of Rs. 12000000 , rate of interest 9.5%, for 240 months. Then after seven proepr repayment i will prepay 2000000, after that what will be my EMI schedule??

  5. I have taken SBI home loan and paying emi from last 4 years at first I was bachelor and now got married last year. We both working. can I get 2nd home loan as joint home loan..?

  6. Dear sir,
    I am looking for Home loan,But the bank guys are saying that minimum 5 years of work experience .is there any specific rule on years of experience.

  7. Dear Sir,
    i have a property on my father name, But that lone was paid by me.
    can u suggest me what is the possible solution to tack Tex benefit threw lone.

  8. I live in USA Florida and i am a happy woman today? I told my self that any Loan lender that could change my Life and that of my family, i will refer any person that is looking for loan to Them. If you are in need of loan and you are 100% sure to pay back the loan please contact them and please tell them that Mr Alfred Kessinger, Lynn referred you to them. am.invest@hotmail.com

  9. Hello. Kindly tell me that if I take a home loan then what will be my interest reset date. And also if my loan is for 15 years then will the rate of interest be high for an mclr of say 5 years. Is it possible to get mclr for more then 5 years?

  10. Hi Alok,

    It’s always recommended to have a home loan insurance because it’s a big investment, while coming to benefits of home loan insurance it covers accidental hazards, Tax exemption, Tax benefit i.e when you file IT returns the it would be exempted.

  11. what is a calculation of reduce EMI & INTEREST year by year ?
    can next year interest is only on balance principal ?

  12. Hi – I took a home loan for a flat when I was posted in US. That time since I had US based salary I got a good loan.. But now I have returned back to India and my monthly loan EMI eats up 85% of my monthly salary.. Based on this would i get additional tax benefits?

  13. Hi, I took a home loan from SBI with MAX gain facility, my question is which is the best way for prepayment, first keep amount in OD account or do prepayment and reduce the tenure.

  14. Dear sir, I have taken home loan 1350000 in Jan 14 at 9%. I want to clear it in Jan 18. Then how much I need to pay now . My EMI is 15364.
    Kindly advise

  15. Dear sir, I have taken home loan 1655000 in April 2017 for 180 months. at 9.15%.. My EMI is 16935. if i pay 100000 rs. how much month less in my EMI ..or how much amaount less in my EMI
    Kindly reply..

  16. Hi, I am currently working in Germany. I will take a home loan of around 65 Lakhs, can i start the repayment of loan amount from the month i take loan itself?

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