There are a variety of home loans available. They are:


This is the common loan for purchasing a home. 


This loan is given for undertaking repairs, renovations and/or upgradation to your home. 


This loan is available for the construction of a new home. 


Home extension loans are given for expanding or extending an existing home. For example, addition of an extra room, etc.


Available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan. 


This type of loan is sanctioned for purchase of land for home construction. 


The Bridge Loan is designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home. 


Balance Transfer loans help you pay off an existing home loan by availing a new loan from another willing lender institution. 


This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.


This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of a property. 


This loan is tailored for the requirements of Non resident indians (NRIs) wishing to build or buy a home in India. These loans are provided by eligible financial institutions in accordance with the guidelines issued by Reserve Bank of India from time to time.

EMI (Equated Monthly Installment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of interest due as well as a portion repayable towards the principal.
a) Some of the lending institutions sanction the loan in-principal in advance of your identifying the property
b) Free accident insurance c) Waiving of pre payment penalty d) Waiving of processing fee e) Free property insurance
To qualify for a home loan, most of the lending institutions in India require you to be:
a) An Indian resident or NRI
b) Above 21 years of age at the commencement of the loan
c) Below 65 when the loan matures
d) Either salaried or self employed and 
e)Worthy of credit facility.
For more details, refer module on "What are you getting into?"
Interest rates vary from institution to institution and presently range from 9% to 12.5 % for floating interest rate & 11.25% to 14% for fixed interest rate (for loan amount below 20 lakhs). The interest on home loans in India is usually calculated on monthly reducing balance. In some cases, daily reducing basis is also adopted.

Annual reducing:

In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender through EMIs paid during the year. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.

Monthly reducing:

In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.

Daily Reducing:

In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

Calculate the total amount payable under the different loan options available for a fixed loan period and amount. The loan under which minimum total amount is payable will be the cheapest source of funds.
Fixed rate of interest means that the rate of interest remains unchanged for the specified duration of the loan. This means you do not benefit, if rates of interest drop in the market. Similarly you do not lose if rates of interest increase. Under fixed home loan rates also, banks/HFCs retain the right to increase the rate of interest after the prescribed interval. This provision is mentioned in the loan agreement. This is known as reset clause in the fine print.
This is the rate of interest that fluctuates according to the market lending rate. This means you stand the risk of paying more than you budgeted for in case the lending rate goes up.
Home loans usually attract following extra costs:
a) Processing Charge: It's a fee payable to the lender on applying for a loan. It is either a fixed amount or may be a percentage of the loan amount applied.
b) Pre-payment Penalties: When a loan is paid back before the end of the agreed duration, a pre-payment charge is demanded by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
c) Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
d) Miscellaneous Costs: It is quite possible that some lenders may levy documentation or consultant charges.
e) Registration of mortgage deed.
Repayment period options range generally from 5 to 20 years.
Usually, most companies give home loan up to a maximum of 85% of the cost of the house. Balance 15%, sometimes called 'seed money', has to be provided by the loan applicant upfront. The amount, for which the applicant is eligible, is determined by the age, income, no. of dependents, monthly outgoing and repayment capacity. This varies from case to case.
In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.
Some institutions ask for 1 or 2 guarantors.
On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 15% of the cost has been paid upfront to the seller of the property.
Most institutions are willing to consider the joint incomes of the applicants for deciding the loan amount. Some institutions do not require the co-applicants to be co-owners of the property to be purchased.
Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1961:
Interest paid on the home loan
As per Sec 24(b) of the Act, a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs. 30,000 in case of loans taken prior to March 1, 1999). The interest payable for the pre-acquisition or pre-contruction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired or constructed. Please remember that in case of self occupied property, this deduction is allowed only for one such self - occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).
Principal repayment of the home loan
As per Section 80C along with section 80CCE of the Act, the principal repayment up to Rs. 100,000 on your home loan will be allowed as a deduction from the gross total income subject to fulfillment of prescribed conditions.
A loan that enables elderly homeowners, to use their home's equity without selling their home or moving from it. A leading institution makes a check out to the homeowners each month. This payment is really a loan against the value of a home.
The general consensus seems like if you can afford a 15-year fixed mortgage, you should go for it. The interest rate will be lower, you own your home in half the time, and the payments aren't actually that much higher. But what if you just look a 30-year fixed mortgage and had the discipline to pay enough extra each month to equal the 15-year payment ?
Repayment period options range generally from 5 to 20 years.

Buying your first house on a loan comes with multiple tax benefits. These deductions not only reduce your tax outgo but also help in managing your cash flows better.

In the case of self-occupied property acquired or constructed out of borrowed funds, the deduction available for interest on capital borrowed is Rs. 2,00,000/-. In case of a rented property, the whole of the interest amount is allowed as deduction. The interest on borrowed funds in pre-construction period is allowed over a 5-year period commencing from the previous year in which the house is acquired or constructed.
The limit of repayment of housing loan qualifying for deduction u/s 80C is Rs. 1,50,000/- (including Stamp Duty, Registration Fee incurred for the purpose of transfer of such residential house property).
Section 54 of the Income Tax Act provides relief to an individual or Hindu Undivided Family from capital gains arising from transfer of a residential house held by the assessee at least for a period of 36 months. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a single residential house in India is exempt u/s 54. If the amount of capital gains is proposed to be utilised, but is not so utilised up to the due date for filing of return then, the amount of unutilised capital gain is required to be deposited in the "Capital Gains Account Scheme, 1988".
Section 54F of the Income Tax Act exempts long term capital gains arising from transfer of any long term capital asset other than a residential house. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a residential house is exempt u/s 54F. To be entitled to this exemption the assessee should not own more than one residential house other than the house sold as on the date of transfer. The provisions of depositing the unutilised capital gain in the "Capital Gains Account Scheme, 1988" as explained above is also applicable.
Section 54EC of the Income Tax Act provides relief from capital gains arising from transfer of any capital asset on or after 1st April 2000 shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of such transfer in the long term specified asset provided such specified asset is not transferred or converted into money within a period of 3 years from the date of its acquisition. However, the investment made on or after 1st April 2007 in the long term specified asset by assessee during any financial year cannot exceed Rs. 50 lakh. For claiming this exemption, the capital gains have to be invested (investment not to exceed Rs. 50 lakh during the FY in which the original asset is transferred or in the subsequent FY) within 6 months of the date of transfer in notified bonds issued by:
a) National Highways Authority of India (NHAI)
b) Rural Electrification Corporation Ltd. (REC)
Registration of a property includes necessary stamping and paying of registration charges for a sale deed and getting it recorded at the sub-registrar's office of the concerned jurisdictional area. If a property is purchased from a developer directly, getting it registered amounts to act of legal conveyance. In case the purchased property is a second or third transaction, it involves a duly stamped and registered transfer deed. Nowadays, property registration process is computerized in most states.
a) Original copies of the chain of title agreements and Building Plan approvals
b) Original registration and stamp duty receipts c) Possession Letter d) Original share certificate (In case of societies) e) Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession f) NOC from the Society or other concerned body confirming no objection to the transfer.
a) Projects approvals can be verified from the corporation or the sanctioning authority’s office
b) Ownership documents can be confirmed from the Sub Registrar’s office where they are registered
c) Share certificate related to societies can be verified from the concerned Society itself
Clear and marketable Title, Sale Deed, Encumbrance Certificate, latest tax receipts, Occupancy Certificate, Building Plan Approvals and Possession Certificate.
Sale Deed, No Objection Certificate (NOC) from builder, NOC from banks, Building Plan approvals, Completion Certificate, PAN Card and Photographs.
Allotment papers of the plot, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card and Photographs.
a) Sale Deed
b) Title Deed
c) Approved Building plans
d) Completion Certificate ( Newly Constructed)
e) Commencement Certificate( Under-construction property)
f) Conversion Certificate( If agricultural land is covered to non-agricultural)
g) Khata Certificate (especially in Bangalore)
h) Encumbrance Certificate
I) Latest Tax Receipts
J) Occupancy Certificate