The Home Loan Journey Explained
A Home Loan is a secured long-term credit facility provided by banks and Housing Finance Companies (HFCs) to purchase or construct residential property. The purchased property itself acts as the primary security until the full loan amount is repaid.
Key Phases of a Home Loan
- Eligibility Assessment: The lender checks your age, income, existing loans, and CIBIL score to determine your maximum borrowing capacity.
- Property Due Diligence: Legal title verification tracing ownership history and technical valuation to establish the property’s current market value.
- Sanction Letter: An official approval letter confirming the sanctioned amount, interest rate type (floating vs fixed), and tenure.
- Disbursal: Funds are paid directly to the builder or seller against registration of the sale deed.
Tax Deductions Every Homeowner Should Know
Under Section 24(b), you can claim up to ₹2 Lakhs annually on interest paid for a self-occupied property. Under Section 80C, principal repayments up to ₹1.5 Lakhs qualify for tax savings. These combined benefits make home loans one of the most tax-efficient financing methods in India.