Owning one’s own house is every Indian’s dream. It is one of the most basic life goals for India. However, with the escalation of real estate prices, this dream has become difficult to realize. This is where taking a housing loan in India becomes the most feasible option to build your dream house.

Taking a housing loan comes with lots of benefits. In this article, we’ll discuss the benefits, types, eligibility, and interest rates of housing loan in India.

The Benefits

Housing loans come with a lot of benefits. Taking a huge loan is a big decision, so you should always consider the benefits and risks involved with your decision. So, here are a few important benefits of a home loan that you must know. 

• Since your house is one of the biggest investments you will make; therefore, it also becomes one of your biggest assets. In future, it can provide you with an opportunity to take bigger loans.
• A housing loan provides you with an opportunity to build a good credit history. This is so because while fending off the loan, you will pay your EMI’s diligently. Paying EMIs at proper times suggests you have a stable source of income, hence, it improves your overall credit score. 
• When you take a housing loan, the bank inspects your property and your builder. They make sure both are reliable, hence making sure that your investment is a safe one.
• You get additional tax benefits, as you can claim an income tax deduction on home loan interest up to Rs.2,00,000 [Under Section 24(B)].

 Types of Home Loans

Your housing plans can vary from buying land, purchasing a constructed property, getting money for construction, or planning for home expansion, etc. Below are some types of home loans that people take as a home loan interest rate is considerably less in India.

Home Purchase Loan

This is one of the most availed of loans in India. Taking this loan helps the buyer buy a property from a different owner. Usually, the home loan interest rate provided is fixed or floating, and it can vary between 9% and 12%. 

House Construction Loan

This loan is offered to those who already have a plot of land and need to construct a house on the same property. So, the bank provides loans to a borrower on a few terms.

Home Expansion Loan

Whether you wish to construct a new room or add a new floor to your already built home, you can still avail of a loan termed as Home Expansion Loan.

Land Purchase Loan 

You can take up this loan to buy a fresh piece of loan to construct a new house, or to leave it as an investment. Usually, banks offer 85% of the total cost of plot/land on this kind of loan.

Other kinds of home loans include:

• Home Improvement Loan- Avail it to renovate your house.
• Home Conversion Loan- To move into a new property from the existing property.

NRI Home Loans- To provide home buying opportunities in India to the 

• non-resident Indians
• Bridged Loans- To buy additional property. 

Housing Loan Eligibility Criteria 

Before applying for any loan, you must thoroughly check the home loan eligibility criteria. The eligibility rests upon your repaying capacity of the loan. The repaying capacity, in turn, depends on

• Your monthly income- If your monthly disposable income is high, you can take higher amounts of loans. Usually, a bank considers that 50% of this disposable income can be used for repayment.
• Your existing liabilities- if you have an existing loan, your eligibility gets weakened by it. 
• Your dependents- Banks check the number of dependents before considering eligibility. A higher number suggests lower repaying capacity.
• Your source of income- If your source of income is stable, then you have better eligibility for taking a loan in case if you were self-employed.
• Your Age- If you are young, you’ve many earning years left. Therefore, you’ve better eligibility in this case.

Home Loan Interest Rate

You must check different banks before taking up the loan as different banks offer different interest rates. Currently, the lowest home loan interest rate starts from 6.64% p.a. Following is the interest rate list of banks for offering housing loan in India.

Owning a house is a diligent process, which can be greatly facilitated by taking up a housing loan in India. With your loan money, you can self-build a house on the right plot and the perfect location. You can also be assured of not depleting your life savings to fulfill your most basic dream. 

Ensure your eligibility beforehand and always decide the type of home loan you need so that your investment becomes a sound one.