A home loan is a credit facility that an individual avails from a lending institution on interest for buying a builder Property, constructing, extending or upgrading a residential property. Since home loan involves a huge amount, it is backed by collateral, which usually is the property for which the borrower is taking the loan. If at any time a borrower defaults on the loan, the bank has the right to liquidate the collateral to recover the outstanding loan cost.
Purpose of loan: Can be used to buy, construct, extend or upgrade a residential property.
Loan-to-Value: Up to 90% of a property’s value.
Tenure: Up to 30 years.
Tax exemption: Tax benefit on home loan interest and the principal amount under Section 24(b) and 80C of the Income Tax Act, respectively.