Buying a house is one of the biggest dreams come true for most people and an extravagant affair altogether. A house loan or home loan simply means a sum of money borrowed from a financial institution or bank to purchase a house. Home loans consist of an adjustable or fixed interest rate and payment terms. A home loan can be opted to buy a new house/flat or a plot of land where you construct the house, and even for renovation, extension, and repairs to an existing house.

Types of home loan

1. Home Loan
   This is the most common type of home loan availed to purchase a house. There are many housing finance companies, public banks, and private banks that offer housing loans where you borrow money to purchase the house of your choice and repay the loan in monthly instalments.
   You can get up to 80%-90% of the house's market price in the form of financing. The lender will hold the house until you completely repay the loan.

2. Construction of a House
   This loan is specially designed for people who want to construct a place according to their wishes rather than buying a pre-constructed house. The approval process for this type of loan is different for it takes into account the cost of plot also. The most important clause when applying for a home construction loan is that the plot must have been purchased within a year for the plot cost also to be included in the loan amount. The loan amount is decided based on a rough estimate of the construction.

3. Home Improvement
   Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation certainly will make your house look better.

4. House Expansion or Extension Loans
   Want another balcony or an additional bedroom? No worries, bank also offer loans for house expansion including alteration of current structure and construction of new rooms.

5. Home Improvement
   Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation certainly can make your house look better. But if you lack the finances for repair and renovation this could be easily managed by loans for home improvement.

6. Home Improvement
   Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation certainly can make your house look better. But if you lack the finances for repair and renovation this could be easily managed by loans for home improvement.

Benefits

• MAKES BUYING A HOME AFFORDABLE FOR ALL -The home loan makes it easier for an average middle-class salaried person to afford buying a home of their own.
• A COST-EFFECTIVE WAY OF AVAILING CREDIT- One of the major home loan loans benefits is that it comes with a lower interest rate than other forms of borrowing like a personal loan or a gold loan. This is because the lender uses the property that you wish to purchase as a security against the amount you borrow.
• CAPITAL GROWTH - the capital appreciation of the real estate properties has been much higher than the interest you pay on the home loan.
• GUARANTEES SAFETY OF THE PROPERTY - IT ensure that the building is legal and that the builder has obtained all the clearance certificates from the local authorities.
• TAX BENEFITS -This is significant benefit of availing a home loan. If you mortgaged property against a loan, you could claim a tax deduction on the principal as well as the interest part of the repayment. For the repayment of the principal component of the home loan, you can claim a deduction under Section 80C. The maximum limit for deduction in this regard is Rs. 1.5 lakhs.

Eligibility

Banks have a list of eligibility criteria for home loans. The first thing banks look at is one's credit history to understand their repayment habits. Typically, a credit score of 750 and above is preferred. Some other important factors taken into account are as follows:

• Age
• Employment Type
• Minimum Annual Salary
• Collateral Security
• Margin Requirements
• Assets, liabilities, stability, and continuity of occupation
• Residency status (Resident Indian/ Non-Resident Indian)