What is home loan?
A home loan is a type of loan that is specifically designed for the purpose of financing the purchase of a home. Home loans typically involve the borrower taking out a loan from a financial institution such as a bank or credit union, and repaying the loan with regular payments over an extended period of time (typically between 15 and 30 years).
Home Loan Interest Rate
The interest rate associated with home loan products can vary greatly depending on factors such as your credit score, the amount being borrowed, and the length of time over which it will be repaid. Generally speaking, those who have better credit scores qualify for lower rates.
Additionally, larger loan amounts may qualify for lower rates than smaller loans due to economies of scale. Lastly, shorter terms generally come with higher monthly payments; however, borrowers may benefit from lower overall interest costs over time if they are able to pay off the home loan in full before it matures.
Home Loan Tax Benefits
In India, home loan borrowers are eligible for tax benefits on the interest and principal components of their home loan. The exact amount of the tax benefit will depend on a number of factors, including the individual's income tax bracket and the amount of the loan.
Generally, the interest paid on a home loan is eligible for a tax deduction of up to INR 2 lakhs per year under Section 24(b) of the Income Tax Act 1961.
Additionally, borrowers can also claim a tax deduction of up to INR 1.5 lakhs per year on the principal component of their home loan under section 80EEA of the Act. It's important to note that these tax benefits are subject to change, so it's always a good idea to check with a tax professional or the Indian Income Tax Department for the most up-to-date information.