HOME LOAN is a major product of the finance sector. What is a HOME LOAN? Even now, people do not know the difference between home loan and mortgage loan.

There are two types of HOME loans. First, for buying a house or building, and second, for constructing a building on a plot of land. There is also a third type of it which includes both these conditions, i.e. for buying a plot and constructing a building on it, which is called P + C (Purchase + construction) in the language of banks. The interest rate on home loans matters a lot and the appropriate interest rate depends on the CIBIL score of the customer. Click here to know your CIBIL score.

Home Loan for Purchase of Building

Buying a building means a house which is fully completed and all the essential works required for living of any person or family are completed such as kitchen, let bath, water, light etc. In this way, loan is given by bank or NBFC to buy a complete building.In this type of HOME LOAN, loan up to 75 to 90% of the market value of the house or its registered value i.e. the registry value is provided.

In this type of HOME LOAN, loan up to 75 to 90% of the market value of the house or its registered value i.e. the registry value is provided.

Generally, all the national banks of the country consider the registry value as the final value and provide home loan accordingly. For example, if the registry value of a building is Rs. 30 lakhs, then the bank can provide loan up to 80% to 90% of its value, even if its selling value is Rs. 50 lakhs, and this % also depends on the customer's profile.

In private banks or Non Housing Finance Companies (NBFCs), more importance is given to the market value (actual selling value) than the registered value, which is often higher than the registered value. Only as an exception, it may happen that the market value is lower and the registered i.e. government value is higher.

That is why in private banks or NBFCs, the customer can get higher loans based on the value of the property.

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HOME LOAN FOR BUILDING CONSTRUCTION

Now we will understand how HOME LOAN is given for building construction. This situation arises only when the customer has already bought a plot or a land or a plot or an old building, which can also be ancestral, which is in a dilapidated condition or is not in a condition to be lived in. In such a situation, the bank provides a loan for building construction on it.

HOME LOAN can also be taken for reconstructing an old building. In this type of HOME LOAN, the loan amount is determined on the basis of construction cost or construction cost (estimate), which is given by an engineer or architect.

In HOME LOAN taken for construction, the loan amount is not paid in one go, instead it is given step by step according to the status of the construction work. This process takes place in three to four stages, first on the foundation, second on height, third on roof, and last on flooring and colour. In this way on completion of the building the final amount is paid and monthly installment of the loan is started.

In this loan, till the construction of the building is not complete, the customer has to pay only the interest on the amount received. The installment (EMI) is started only after the complete loan is received. Click here for the best offer as per your profile and requirement.

The third type of HOME LOAN is for purchase along with construction i.e. (P + C)

In this, HOME LOAN is given to the customer for buying a plot and constructing on it. In this HOME LOAN, the loan amount is divided into four parts. The first installment of the loan is given for buying the plot which is 70% of the value of the registry to be done.

And all the subsequent part payments are given to the customer according to its construction.

In this loan also, till the construction of the building is not complete, the customer has to pay only the interest on the amount received. Its installment (EMI) is started only after receiving the entire loan.

Nowadays, all the customers are facing a new problem and that is capital gain tax. This is the tax which is levied on the buyer on selling his plot or building and on taking the amount more than the government value (govt. guide line) of the above plot or building in his account, which is the first part of the above amount. 30%. To avoid this, every buyer, builder, colonizer gets the plot or building registered through government guide and sells it at market price i.e. at a higher value. In such a situation, when it comes to loan, the bank is forced to give loan on the registered value only. Can I get a home loan if my plot is undeveloped? Click

For example, Mr. Ghanshyam wants to buy a plot of land with an area of ​​1000 sq. ft. and take a loan to build a single storey building on it. The market value of the plot is 30 lakhs at which the buyer is selling it to him and the construction cost is 15,00,000/-. Thus, the above building has to cost 46 lakhs including complete registry cost but the government guide line value of the plot is coming to 8 lakhs only. Now if the buyer gets the registry done for only 8 lakhs, then the government bank will be able to give him 70% of the registry value i.e. up to 5 lakh 60 thousand. Whereas according to Ghanshyam ji's income profile, the bank can also give him a loan of 40 lakhs.

Now the problem is that until the buyer does not get the full amount of 30 lakhs, he will not be able to get the registry done and the problem of the bank will be that even after the registry, it can show only an estimated cost for the construction of the building and not more than that. An estimate of 15 lakhs cannot be shown as more than 20 lakhs. In such a situation, most of the customers back out because they do not have such a long difference amount in black. Click here for the best offer as per your profile and requirement.

But the good thing is that private banks and NBFCs have made this problem their main feature and the customer is not only getting ample loan as per his income but also the registration cost of the customer has been brought down to a low level, even if the registration is done as per the government guidelines.

In this, the % of loan is going up to 150 to 250% of the registration value. Thus, both the parties are happy with this process, the buyer is also happy that he does not have to pay capital gain tax and the customer is also getting benefit in stamp duty.

Today, most of the housing finance companies are giving loan as per the market value of the plot or building.

If you are also facing a similar problem, then click here for HOME LOAN.

Other benefits of HOME LOAN:
The Indian Income Tax Department gives HOME loan to all citizens. Full income tax exemption is given on interest paid on loan

Under Section 80EEA of the Income Tax Act, interest paid for a first-time home buyer's home loan is exempted up to Rs 1.5 lakh. Under Section 24 of the Income Tax Act, you get a deduction of up to Rs 2 lakh. You can get a housing loan tax benefit of up to Rs 1.5 lakh on the second home purchased with a home loan.l

The Government of India provides a tax benefit of up to Rs 5 lakh to individuals taking a home loan - tax deduction of up to Rs 1.5 lakh on payment of the principal amount of the home loan under Income Tax Section 80C and tax deduction of up to Rs 2 lakh on payment of interest on the home loan under Section 24(b). Apart from this, to promote affordable housing, the government has announced another tax deduction benefit. If you have paid interest on a HOME LOAN that is enough to reduce your tax even after the tax deduction under Income Tax Section 24(b), you can now claim an additional tax deduction of up to Rs 1.5 lakh under Income Tax Section 80EEA.

Sections of Income Tax Act Tax deductions
Section 80C Deduction of up to ₹1.5 lakh on payment of principal amount of HOME LOAN (inclusive of stamp duty and registration fees).
Section 24(b) Deduction of up to ₹2 lakh on payment of interest on HOME LOAN.
Section 80EEA* Deduction of up to ₹1.5 lakh on payment of interest on HOME LOAN for first time home buyers.

*Not applicable on HOME LOAN taken after March 31, 2023

Tax exemption under Income Tax Section 80C
Deduction of up to ₹1.5 lakh on payment of principal amount of HOME LOAN You can get a deduction of up to Rs. 10 lakh. This may also include stamp duty and registration fees, but these can be deducted only once in the year in which they are paid.

The HOME LOAN must have been taken for buying a new house or constructing a house.

Note: If you sell your house within 5 years of buying it, the tax deduction you have received so far will be added to your income in the year you sold the house.

Tax deduction on HOME LOAN interest payment under Income Tax Section 24(b)

You can get a tax deduction of up to Rs. 2 lakh on payment of interest on HOME LOAN

*Not applicable on HOME LOAN taken after March 31, 2023

Tax exemption under Income Tax Section 80C
Deduction of up to ₹1.5 lakh on payment of principal amount of HOME LOAN You can get a deduction of up to Rs. 10 lakh. This may also include stamp duty and registration fees, but these can be deducted only once in the year in which they are paid.

The HOME LOAN must have been taken for buying a new house or constructing a house.

Note: If you sell your house within 5 years of buying it, the tax deduction you have received so far will be added to your income in the year you sold the house.

Tax deduction on HOME LOAN interest payment under Income Tax Section 24(b)

You can get a tax deduction of up to Rs. 2 lakh on payment of interest on HOME LOAN.