Understanding Housing Loans: Types, Features, and Benefits

By: Homeloan0 comments

Buying or constructing a home is a dream come true for most people.  Not everyone has enough money to turn this dream into reality and this is when individuals need financial assistance.  Home Loans or housing loans are financial options offered by banks and other organizations such as HomeLoans4U to help people fulfill the dream of owning a home.  There are different types of home loans with unique features and benefits.  Following are a few.

Types of housing loans

Fixed -Rate Loan:  This type of loan provides stability as the borrower is aware of the monthly payments which makes it easier to plan the finances.  It offers a fixed interest throughout the loan tenure.

Adjustable-Rate Loan:   In this type of loan, the interest rate initially is usually low and increases or decreases depending on the market rates.  This carries a certain amount of uncertainty when compared to fixed rate loans.

Government-Backed Loans:  Government organisations insure or guarantee these loans and offer flexible eligibility criteria and reduced down payment, increasing the accessibility of homeownership to a wider spectrum of people.

Features of housing loans

Interest rates: Interest rates play a major role in a housing loan.  Different vendors offer different interest rates and one should be careful to choose diligently to get the best deal.

Loan amount and tenure: Irrespective of what could be the requirement, the loan amount primarily depends on factors like income, credit score, and the value of the property.  Tenure refers to the duration of repayment of the loan.  These play an important role when determining the loan amount.

Down payment: This is a certain percentage of the amount that the borrower needs to pay initially.  Higher the down payment, lesser the loan amount and lesser the burden of interest.

Repayment: There are various repayment options such as equal monthly installments and flexible schedules.  One can choose an option that suits the financial goals.

Benefits of Housing Loans:

Ownership – A person can own a home without having to wait for years to save and collect the entire purchase or construction amount.

Tax Benefits: Under Section 80EE

  • Tax deductions of up to Rs. 1.5 lakh on the interest portion of your home loan payments.
  • This benefit can be accessed in addition to the current exemption of Rs. 2 lakh under Section 24(b), providing an extra advantage to borrowers.
  • The value of property must be less than Rs.45 lakh.

Asset: Real estate has always been an excellent asset that keeps appreciating continuously.

Refinancing: Depending on the changing market, borrowers may opt to refinancing which will help them gain lower interest rates and reduce monthly payments.

Housing loans play a major role in turning the dream of owning a home into reality.  With proper insights into types, features, and benefits, borrowers can make informed decisions and choose the home loan that is most suitable for them.  HomeLoans4U is happy to assist you with all your queries related to home loans.  You dream of a home, and HomeLoans4U will help you turn into reality.

Related post

Leave A Comment

Social media & sharing icons powered by UltimatelySocial