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14 Facts About Home Loans In India

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There are a lot of people who still have few myths regarding home loans in India. Many others are not aware of the basic definitions of the few of the jargon that are used in the home loan segment.

Here we have listed 14 such facts to enlighten you about the home loans in India. We will keep updating this list to keep you informed of more new things.

  1. You need to have a Good Bureau score +750 to avail a home loan.
  2. Only co-owners can be the co-borrowers for any home loan.
  3. For any home loan, banks fund only up to 80% of the home property value.
  4. MCLR (Minimum Cost of Funds Based Lending Rate) is different for different banks. One must look up for the markup fee to decide for the loan.
  5. If you are a first time home buyer, you can claim an extra of Rs 50,000 as tax benefit on the interest repayment.
  6. You can share all your verified legacy documents to the lenders within a minute using your Digital Loan Key.
  7. If the married couple buys a home in India in joint ownership, they both can claim for tax deduction separately. Rs 3 Lakhs under section 80C and Rs 4 Lakhs under section 24.
  8. Good Affordability Measure < 30. (Affordability measure = EMI/NMI)
    *EMI =Equated Monthly Instalment
    *NMI = Net Monthly Income
  9. Every year you can use 1/5th of the Pre EMI interest to take tax benefits.
    (Annual deduction = Total Pre-EMI/ 5)
  10. Loss from home property = EMI > Rent. This means you are paying more EMI and earning less rent.
  11. Processing Fee = 0.25% to 1% of the home property value. This is a non-refundable fee that you pay to the lender.
  12. Franking Fee = 0.1% of the home loan value. This fee is for confirmation of your paid stamp duty.
  13. Switching Loan Fee = 1% of the outstanding home loan value. This fee is applicable when you change from floating rate of interest to fixed rate of interest model.
  14. Loan Tenure Change = Rs 500 to Rs 5000. This is applicable when you increase or decrease the rate of interest.

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