The concept of Home loans and car loans are quite the same, only the purpose of the two are different. While in a car loan, the loan was taken to purchase a car; a home loan has the other drive. A home loan is taken for buying a house and constructing and repairing a house. In both Home loan and car loan, EMI (Equated Monthly Installments) are to be paid. EMI has to be paid in strict adherence; otherwise, banks can sell the property on the open market and recover the amount of any possible loss from therein.
Some of the most common features of a home loan that helps in understanding it better are-
Home loans are provided by almost all the central banks and financial institutions in the country. They are experts in their fields and what they do and hence more reliable to get a loan from. The customers generally do not feel any doubts about getting the loans from them.
Some banks also provide around 90% of the value of the property. Home loans cover most of the parts of the house.
Home loans are available for many purposes. Some of them are-
Purchasing a house
Construction of a house
Improvement in house
Extension of a house
Land/ Plot purchase
Housing Finance Companies (HFC) generally offer these loans that charge EMI, which consists of interest and principal amount. Examples of such can be Axis Bank which offers their Axis Bank Home Loan, and it falls under this category.
Even NRI’s (Non-Resident of India) are eligible to get a home loan in India after submitting certain necessary documents.
Home loans are available at flexible Repayment options carrying fixed interest charges or floating interest charges. It all depends on the borrower as to what aspect they have to choose.
Home loans are completely secured loans that are secured against the value of the property. In case of any defaults in EMI, banks have the option of reselling the property in the open market and recover the amount of loss incurred.
With the help of a Home loan, an individual can improve their credit score too. This is due to prompt and timely repayment of EMI; a person can massively improve their credit score. This will benefit them in taking any other loans in the future and getting better approvals of the loans in the future.
Home loans are an essential financial service available in the financial market as it helps a person get the home of their dreams.
Home loans are generally available for a maximum term of 30 years.
Home loan interests are generally known as EMI, which covers interest and a part of the principal amount. By paying EMI every month on time, a person can reduce their liability to nil.
The borrower can also take the tax deduction of home loans under Income tax. Section 80 C provides the conclusion of the payment of interest and principal amount. The borrower can use EMI payment to take deductions under Income tax, to reduce the tax liability, and enjoy more indirect savings.
There are huge chances of capital growth once you have entered into any property-related stuff. And when that capital asset is sold in the future, you will attract capital gains, and The borrower can also avail of the deduction of the same under Income tax.
One of the most significant traits of a home loan is the affordability of home loans. Home loans are available at lower interest rates. Even lower than gold loans, which makes them a perfect option for a borrower. As in this pandemic situation, the finances of individuals have been disturbed. Everyone looks for a better chance and to save more. Home loans fulfill such criteria.
Conclusion:-
Home loans are quite an affordable option of getting a loan to purchase the house of your dreams. It comes with many added additional advantages too, which a borrower can use to maximize their savings.
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