Benefits of Home Loan

Purchasing a home is a significant step. It causes tension, anxiety, and a tremendous feeling of success. With rising housing prices, it is impossible to buy a home using only personal money. Virtually everyone has the ability to obtain a house loan.

A house loan is often one of the most significant liabilities. Given the huge sum and the lengthy term involved, your house loan does provide certain advantages. The following article discusses the benefits of getting a house loan.

Wise Investment

The potential of a tempting capital growth instrument is the most compelling justification for purchasing a home for anyone of us who has witnessed real estate prices rise over the past five years. 

Building expenses, which constitute further over 70% of the overall cost of the property, have climbed at a 15% annualized rate over the last 10 years. Rental rates appear to maintain line with inflation, leaving a house one of the few long-term assets that may protect you against rising prices.

Achievement

Purchasing a home is one of the most substantial financial expenditures you will make in your lifetime, and not simply for aesthetic reasons. The amount of money that many of us put in our homes makes it the principal element of our financial portfolio!

Tax Benefits

Section 24(b) of the Income Tax Act of 1961 allows for deductions of up to Rs. 1.5 lakh out from interest charges due on the home loan for the purchase/construction of residential properties for calculating earnings from house property. (The exemption is lowered to Rs. 30,000 for loans received before March 1, 1999.) The interest charged for the pre-acquisition or pre-construction phase would really be taxable in 5 equal annual installments beginning with the year the house was purchased or built.

The principal settlement up to Rs. 1 lakh on your house loan would be recognized as a deductible from your total income under the following the enactment of Sections 80C combined with Section 80CCE of the Income Tax Act, 1961, provided to the fulfillment of certain criteria.

Rate of Interest

Purchasing a home is a long-term choice that must be made over a 10-year period, as mortgage rates may fluctuate. As a result, you can be confident that dropping interest rates will reward you at a certain point throughout the cycle.

There may also be instances where interest rates decline, customers can pay off the loan and buy your property. For example, consumers who purchased a home in 1995 at a cost of borrowing of 18 percent not only watched interest rates decline considerably over the next decade, to a low of roughly 7.5 percent but real estate prices also rose sharply. This provides a two-fold boost to wealth.

Document Required For Home Loan 

All banks and Financial Institutions demand the same paperwork when applying for a home loan. However, certain precise criteria may differ depending on your home loan type, personal credit score, and so on. Here is a few crucial home loan paperwork that you will wish to provide during the loan application process.

List of Documents

• Home Loan application form
• Identity Proof (Aadhar Card, Voter ID, etc.)
• Age Proof (Class Xth Certificate, Aadhar, etc.)
• Address Proof (Aadhar, Passport, etc.)
• Document List for Salaried Professionals

1. Form 16 
2. Letter from employer 
3. Form 16 
4. IT returns for the last three years 

Aside from evidence of earnings, the salaried individual must also provide any financial proof (such as fixed deposits, shares, etc.) and passport-size pictures.

Document List for Self Employed Professionals

1. Income Tax Returns (ITR) for the past 3 years
2. The Company/Firm’s Balance Sheet and Profit & Loss Account Statement (duly attested by a C.A.)
3. Information about Business Licenses (or any other equivalent document)
4. Professional Practice Licence (For Doctors, Consultants, etc.)
5. Document of Registration of Business (For Shops, Factories & Other Establishments)
6. Certificate of Business Location

Documents related to property including

1. Transaction documents from the contractor (in case of a new house)
2. Buyers Agreements / Allotment Certificate
3. Ownership Papers, as well as the sequence of preceding property papers (in case of house resale)
4. A copy of the purchase agreement (if already executed)
5. receipt of the home seller’s upfront deposit
6. The plot’s ownership documents (in case of house construction)
7. An architect’s or civil engineer’s thorough estimation of housing construction.
8. A copy of the plans that have been authorized by the local councils
9. Documentation proving No liabilities on the asset

Additional Documents:

1. All applicants and co-applicants must provide passport-sized pictures (to be affixed on the application form and signed across)
2. Evidence of one’s own contribution
3. Banking accounts statement of the past six months confirming the settlement of continuing debts (if any)
4. Information on continuing mortgages in the names of an individual or business organization (such as the amount owed, mortgage repayments, objective, outstanding loan amount term, and so on) (if any)
5. A check for the service fee in favor of the home loan issuer

List of Documents Required for NRI/PIO Home Loan Applicants

KYC documentation:

For Salaried Individuals:

1. Passport with VISA stamps / PIO Card with a valid overseas address
2. Proof of Income (For Salaried Persons):
3. Employment authorization
4. Agreement of Work / Recruitment Letters / Offer Letter
5. ‘Last 3 months’ work permit/identity card Wage certificates/slips (in English) showing identity, date of joining, position, and pay data are required for candidates operating in the Middle East.
6. Income credits are shown on financial records from the previous six months. NRE / NRO Account (if any)
7. Credit Agency Information (in case available in the country where you are residing)
8. a certified copy of the preceding year’s ITR
9. A copy of their Permanent Release Permit is required for candidates operating in the merchant sea (CDC).
10. P60/P45 forms and the most latest contract of employment (for salaried)
11. Loan A/C statements for the preceding year if you have existing debts from another bank.

For the Self-Employed:

1. Professional Registration Permit / Organization Permit (for Doctors, Consultants, etc.)
2. Certification of Business Registration
3. Proof of business location
4. Proof of income is essential for self-employed professionals/businessmen.
5. Balance sheets and financial statements examined or certified by a C.A. ITR for the last 3 years 
6. ‘In the last 6 months’ Bank Foreign bank summary in the title of an individual and/or a company/unit.

Property Documents:

1. Original title deeds detailing the ownership of the property
2. Encumbrance Certificate Agreement for Sale/sale deed/detailed cost estimate from Architect/Engineer for property to be bought/built/extended/improved
3. A copy of the construction/purchase/extension designs that have been authorized
4. Payment receipts for the acquisition of the housing unit, ULC clearance/conversion order, and so on.
5. Receipts for investing margin money from NRE/NRO accounts in India using regular banking channels
6. receipt for the most recent tax payment
7. Letter of allocation from the co-operative society/flat owners’ association