Home loan
or Housing loan is taken by a borrower from a bank / HFC (Housing Finance Company) and is issued
against the property intended to be bought by the borrower, which gives the
banker / HFC a conditional ownership
over the property.
Borrowers
(Loan buyer) are required to pay at least
10 to 20 per cent of the value of
the property at the time of availing a housing loan.
Interests on housing
loans are of 2 types. One is fixed interest loan. Other is floating interest
loan.
It is advisable to
insure both your house and housing loan to safeguard your interest. The normal
tenure of the housing loan is 5 to 20 years (some banks and HFCs give up to 30
years) and it also depends on the
current age of the borrower.
Principal &
interest repayments on housing loans are eligible for income tax rebates.
The Income tax
section is 80 C - Principal repayment,
up to Rs. 1 lac, section 24 is Interest repayments up Rs. 1.5 lac for borrowers
living house.
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