How Housing Loans Have Become the Best Choice for Our Most Vital Need – Explained!

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Purchasing a home is a major step in life. However, due to the rising property cost, it is tough to purchase a home through your savings entirely. Here is where opting for home loan is the best solution to meet your goal of buying a home early in your work career without having to exhaust your savings or investments. However, your home loan eligibility depends upon various factors that you must consider working on before you apply for a home loan.

Here are top benefits of availing a home loan:

  • Tax benefit

One of the major benefits of home loan is it allows you to avail tax deduction on its principal and interest repayments. According to Section 80 C, you can claim tax deduction of up to Rs 1.5 lakh on the principal repayment while, as per Section 24 B, you can avail up to Rs 2 lakh tax deduction on the interest repayment.

  • Availability at lower home loan interest rate

Home loan is secured in nature and is available at lower interest rate with its rate starting from 6.50 percent p.a. Note that the chances of availing a lower housing loan interest rate is based upon your credit score, repayment capacity, profession, and other parameters.

  • Availability of a longer repayment tenure

Unlike different loans, home loan is a big-ticket loan and comes with a longer repayment tenure of up to 30 years. Owing to the availability of a longer repayment tenure, you can select your repayment tenure depending upon your repayment capacity and cash inflow.

  • Do not levy prepayment charges on availing floating interest rate option

As RBI has prohibited all the lenders from charging foreclosure or prepayment charges on the floating rate, no prepayment or foreclosure fee is charged by the lenders on prepayment of the home loan. While lenders providing home loans at fixed rate might charge foreclosure or prepayment charges, some lenders might not charge any penalty in case the loan prepayment is made from your own funds.

  • Can choose the top up home loan route to meet financial mismatches or emergencies

Only existing home loan borrowers hold the eligibility to avail top up home loans. Note that such loans are the same as personal loans where you can use the proceeds to meet your different personal expenses like car purchase, children’s higher education or marriage, personal travel, home renovation or improvement, medical costs etc. Thus, there is no restriction on the usage of funds on the top up home loan except if the proceeds are utilized for any speculative reason.

Absence of restriction on funds’ end usage via top up home loan makes them a useful credit alternative to personal loan and loan against credit card. Also, ensure that these loan options come at a lower interest rate, which might be a little higher than the underlying home loan interest rates with longer tenures. Thus, availability of lower interest rates and longer tenures make top up loans the cheapest option available to the existing home loan borrowers than their alternative options.


With the above-mentioned points, it must be clear that home loans come with a lot of benefits. So, if you are looking to apply for a home loan, consider first checking your EMI outgo through home loan based on your repayment capacity using the home loan EMI calculator. Once done, keep the documents required for home loan handy to avail the loan approval without any hassle.


David Cohen

Rachel Cohen: Rachel is a sustainability consultant who blogs about corporate social responsibility and sustainable business practices.

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