When an individual is buying a home, they are investing in an asset for a lifetime. One of the most common signs of success and security in our time is owning a home. The purchase of a home will require a sort of financial assistance and with the rising price of real estate an individual may find it difficult for acquiring funds or they will not have sufficient finances in their bank accounts for buying their home. In such situations, opting for a home loan is one of the best options for generating finances. A home loan is a loan product which is provided by the financial institutions to the customers who require the financial assistance for purchasing the home.
Through a home loan, customers will get the loan amount for the purchase of the home. The loan amount will be provided at a certain interest rate. A housing loan is one of the most optimal way of acquiring funds for the purchase of a home. These loans come with flexible tenures and hassle-free documentation. Repayment of a home loan is done through equated monthly instalments (EMIs). Through these equated monthly instalments, customers will need to pay back the loan amount through instalments to the financial institution. The monthly instalment will need to be made for a set tenure period. The tenure period is set during the time of loan sanctioning. The customer should choose the home loan that best suits their requirements and doesn’t affect their daily expenses.
Some of the features of a home loan are listed below:
Low interest rates:
Buying a home is a long-term decision, thus it is important to make sure that the interest is affordable since the tenure for a home loan is long. As home loans are secured loans, that means the customer will have to provide a security as collateral, the interest rates offered on home loans are low.
Deduction for interest paid on housing loans:
If a customer is paying the EMI for a home loan, it will consist of two components, the interest and principal repayment. Interest of EMI paid for the year is claimed as deduction of up to maximum of.
Price of property will generally rise well over time and this will lead to capital appreciation and it has become one of the major reasons for investing in a property. Not just the construction costs, the rents over a period of time will seem to keep up with inflation as well making the home one of the best investments for the long term.
Deduction on principal repayment:
The maximum amount that can be claimed is going to be up to. But for claiming this deduction, the house should not be sold within 5 years of possession.