A home loan is a loan disbursed by a bank or financial institution (lender) to an individual precisely for buying a residential property. Here, the lender holds the title of the property until the loan is paid back in full along with interest.

• Tax benefits:-To encourage more and more people to buy their own house, the government of India provides tax deduction on the principal as well as interest paid on a home loan
  -Tax exemption on repayment of the home loan principal:This is the deduction allowed under Tax Section 80C with a maximum annual tax deduction of Rs, 150,000 under the section.
  - Tax benefit on the interest rate for a home loan:Under Section 24 of the Income Tax Act, you can avail the tax benefit on the amount of interest paid on a home loan to the maximum limit of Rs. 2 lakhs for a self-occupied property.
• Balance Transfer Facility: – In case of home loan you have the facility to transfer your home loan to a different lender if he is giving you a loan at a lower interest rate.
• Makes it easy to buy dream home: - For many people buying a house with own money is not possible, home loan as it can be repaid in easy monthly instalments makes it easier to buy a house.
• High repayment Tenure: - Among all types of loan, a home loan has the longest repayment tenure which goes up to 30 years, so one can reduce the burden of equated monthly instalments by extending the tenure.
• Capital appreciation: – You will also benefit from the rise in prices of the property over time.
• Tax benefits on the second house: - In case of the second house, you are eligible to claim a deduction for the entire amount of housing loan interest paid under Section 24B of Income Tax Act.
• Saves you from paying rent: – As rent in metro cities is quite high they put a strain on your monthly budget. It is better to pay the EMIs and own a house.

Anyone — whether self-employed or salaried individuals/ professionals — with a steady source of income can apply for a home loan. One must be at least 21 years old when the loan period begins and should not surpass an age of 65 years when the loan ends or at the time of superannuation. This is the general home loan eligibility criteria and specifics such as the minimum and maximum age limits, minimum income level, etc. may differ from one lender to another.

• Income level of the applicant
• Age of the applicant
• Qualification (stability and occupation continuity)
• Resident status (maximum limit for an Indian resident differs from that of a non-resident)
• Spouseʼs income (household income is taken into account when there is a co-applicant)
• No. of dependants (it is a measure of repayment capacity)
• Credit history and score (past repayment track record)
• Status of existing loans

• Land purchase loans:These loans are granted to individuals for the purchase of land on which they intend to build a house.
• Home purchase loans:These are the most common type of home loans that are granted to individuals and they are granted for the purchase of an apartment.
• Home construction loan:This type of loan is granted to individuals for the construction of a house on a plot of land that is already owned by the applicant.
• Home Expansion/Extension Loan:This loan is specifically granted to individuals who want to expand their current home to include a new construction such as an additional floor, room, bathroom, etc.
• Home Improvement Loan:Existing homeowners who lack sufficient funds to renovate their an existing home can apply for this loan to upgrade their home with a new paint job, electrical wiring, waterproofing, etc.
• Home conversion loans:Using this type of home loan, an existing homeowner can add to their existing loan so that they can purchase a new house. This type of loan is only applicable to existing homeowners.
• NRI Home Loans:These home loans are specifically designed to provide non-resident Indians with financing so that they can purchase a home in India.

Fixed-rate home loans are offered at a predetermined interest rate during the loan period and these remain unchanged during the loan period irrespective of market conditions. This can be a huge benefit when market volatility starts affecting interest rates. For instance, if the RBI increases interest rates on loans, then people with a fixed-rate home loan will not be affected by any increase or decrease in the market interest rates and the EMI amount will remain unchanged.

If the interest rate on the loan varies periodically over the loan tenure, then it is called a floating rate home loan. Lenders have their own base rate which determines the rate of interest charged on a home loan. The base rates of banks are revised from time to time based on RBI directives as well as other factors, which leads to an increase or decrease in the EMI amount payable.

Yes, one can repay the loan amount before completion of the scheduled loan tenure by making a lump sum payment towards paying off the loan. In such cases, the lender may decide to apply some penalties in the range of 2-3% of the principal amount outstanding. Some banks and NMFC (non-banking financial companies) do not charge any penalty on making prepayment of a home loan.

If you have an existing home loan and have made timely repayments towards the existing home loan, you may get the option of borrowing an additional loan equal to the amount you have paid off on your current home loan. This is termed as a top-up loan. The interest rates on a top-up loan are less than a personal loan and it requires little or no paperwork to process this loan and the money can be used for a range of expenses.