‘Home’ brings to mind comfort, joy, pride and family time. Every homeowner will tell you that her home gives her a sense of identity and its ownership is sacrosanct; this is one asset she would never trade for anything in the world.

To experience this sense of ownership, pride and joy, now would be a good time to plan your home purchase. Becoming a homeowner needn’t be hard on your pocket. You can Apply for Home Loan and bring alive your dream of owning a home. There are numerous benefits of availing a home loan; you get tax benefits on interest paid and loan amount repaid; with a Home Loan Apply to achieve homeownership today instead of in future; the home loan provider assists you in terms of assessing the builder’s credibility and track record and the legal documents pertaining to the building.

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In addition to these benefits, there are 3 key benefits of becoming a homeowner in present times:

1. Low property prices: Now homebuyers have multiple options in the affordable home segment. This has a two-pronged benefit for a home buyer – on one end, she can afford a larger home or purchase a home for a lower amount than she had budgeted. On the other end, she can enjoy other benefits of buying a home with a home loan such as tax benefits, paying a small amount as down payment and using a home loan to pay the rest, longer loan repayment tenure of up to 30 years etc.

2. Reduction in GST rates on home purchase: GST (Goods and Services Tax) rates on home purchase have been reduced significantly. Currently, GST rate levied on purchase of residential homes is 5 per cent (1 per cent for affordable homes) without the benefit of input tax credit (ITC). Purchasing a home today will give you the benefit of these low rates.

3. Low interest rates: Home loans have become very affordable today with interest rates moving downward in the recent past. Lower interest rates result in lower EMI amounts which makes home loans more attractive and affordable.

The key benefit of a home loan is that you can become a homeowner today and you needn’t wait to accumulate sufficient capital to make your home purchase. Additionally, your home loan repayment tenure can extend up to 30 years depending on your loan eligibility and other norms of the home loan provider (the longer your loan tenure, lower is the EMI amount). This gives you the comfort of repayment over a long period without putting pressure on your finances.

Home Loan Tax Benefit (FY 2023-24): How To Save Tax On Your Home Loan?

With the rising real estate prices across the country, buying a house with your own money is not a feasible option for most. Home loan is the go-to option for such buyers. While a home loan can help you realize your dream of owning a home, it can also help you save a considerable amount of money in taxes.

Income tax benefit on home loan

There are three different sections of the IT Act under which a home loan is eligible for deductions. A home loan is made up of two components- principal and interest. It is possible for you to claim deductions on repayment of both of these components as per the income tax laws. Let us have a detailed look at these home loan tax benefit sections-

1. Home Loan Tax Benefits under Section 80C

Under Section 80C of the IT Act, you can claim tax deductions on the principal amount you repay to your lender. This deduction is also applicable to the registration and stamp duty charges of your home.

The maximum housing loan tax exemption under Section 80C is Rs. 1.5 lakhs in a financial year. Note that there are several other investment options such as ELSS funds, PPF, and tax-saving FD, which are also eligible under section 80C. Even if you have invested in such instruments, the deduction limit will remain the same at Rs. 1.5 lakhs.

2. Home Loan Tax Benefits under 24(b)

Section 24(b) offers income tax rebate on home loan but only on the interest part of the loan. It is also applicable if you have taken a loan for home construction or renovation. The deduction is applicable on the prepayment charges and processing charges you pay to your lender.

If you have rented out the purchased property, you can claim full interest payment deduction. However, if you have occupied the property, the deduction limit is Rs. 1.5 lakhs in a financial year.

3. Housing Loan Tax Benefits under 80EE

This tax saving on the home loan is only applicable for first-time home buyers. If you have purchased a home for the first time, you can claim additional deductions of up to Rs. 50,000 under section 80EE if you fulfil a few conditions.

To claim this benefit, the home loan amount can only be up to Rs. 35 lakhs and the cost of property cannot be more than Rs. 50 lakhs.

Deduction for Joint Home Loan

If you have taken a joint home loan, each loan holder is allowed to claim home loan interest deduction of up to Rs. 2 lakhs and home loan principal deduction of up to Rs. 1.5 lakhs.

However, to take benefit of this deduction, each of the joint loan holder should also be co-owner of the property. So, if you are looking for higher income tax benefit on the home loan, a joint home loan can be an excellent option.

Selecting the right lender for home loan

With so many ways to save taxes with a home loan, it is often confusing for first-time borrowers to take maximum benefit of the available deductions. As a result, it is essential to choose a lender very carefully. Go for a reputed lender that can offer detailed guidance on home loan tax exemption laws.

This will not only allow you to fulfil your dream of purchasing a house but also save a considerable amount on tax payments

Latest Mandatory RBI Guidelines for Home Loan 

2023 marks a significant stage in the world of Home Loans. The Reserve Bank of India (RBI) has recently released a fresh set of guidelines, altering the terrain for home buyers and borrowers alike. As we live through the changes, it is essential to understand what these mandates entail and how they may affect your path to home ownership. In this comprehensive guide, we’ll explore RBI’s recent directives, shedding light on their implications and opportunities while also exploring how ICICI Bank Home Loans can act as a reliable partner in your financial journey.

RBI Eligibility Conditions for a Home Loan

When securing a Home Loan, it is essential to thoroughly understand and meet the RBI’s eligibility conditions. These conditions are the foundation upon which your loan application is assessed:

1. Credit Score: A good credit score is essential to be eligible for a Home Loan. Your credit score is a reflection of your creditworthiness and financial responsibility. A high credit score demonstrates your ability to manage credit effectively, which is a significant factor considered by lenders.
2. Income and Identification Documents: To establish your eligibility, you must provide a comprehensive set of income and identification documents. This includes proof of your income source, such as salary slips for salaried individuals or income tax returns for self-employed individuals. Provide documents such as PAN Card, Aadhaar Card and passport to verify your identity.
3. Loan Agreement: Upon approval of your Home Loan application, borrowers are required to sign the loan agreement. This agreement outlines all the Terms and Conditions of the loan, including interest rates, repayment schedule and any applicable charges. By signing this agreement, you adhere to the terms throughout the loan tenure.
4. Home Loan Insurance: While not mandatory, RBI strongly recommends considering Home Loan insurance. This insurance acts as a safety net, safeguarding your Home Loan in the event of unforeseen circumstances, such as your unfortunate demise. Opting for Home Loan insurance alleviates the burden on your family members, ensuring they won’t have to carry the repayment responsibility.

Mandatory Rules and Regulations to Apply for A Home Loan

The Home Loan application process involves navigating a set of mandatory rules and regulations to ensure a transparent and responsible lending environment:

1. Know Your Customer (KYC)

One of the initial steps in your Home Loan application is submitting the KYC documents. These documents include proof of identity, such as passport, or driving licence and proof of address, like electricity bills or Aadhaar Card. Additionally, you’ll be required to provide photographs as part of the KYC process.

2. Income Proof

Lenders require comprehensive income proof to evaluate repayment capacity. For salaried individuals, this involves providing salary slips and for self-employed individuals, income tax returns, audited financial sheets and certificates of practice, if applicable, serve as proof of income.

3. Property Valuation

Property valuation is a critical step in the loan approval process. Lenders will appraise the property you intend to purchase to determine its fair market value. This valuation ensures that the loan amount aligns with the property’s worth.

4. Margin Money

Lenders typically require borrowers to contribute a portion of the property’s cost from their savings as margin money. This demonstrates your financial commitment to the investment and is a safeguard for lenders.

5. Loan Tenure

While Home Loans often offer a maximum tenure of up to <30> years, the specific terms can vary depending on the lender and the loan product you choose. Understanding the tenure and choosing one that aligns with your financial goals is essential.

RBI Guidelines for Loan Against Property

When considering a Loan Against Property (LAP), as per RBI guidelines, it’s crucial to take note of these key factors:

1. Property Type: The property against which you seek a loan should be in India, whether residential or commercial.
2. Age: Borrowers typically need to fall within the age bracket of 18 to 70 years to be eligible for a LAP.
3. Employment: Both salaried and self-employed individuals are eligible for LAP, with a minimum work experience requirement typically in place.
4. Credit Score: A credit score of 700 and above is often required to demonstrate your creditworthiness.
5. Income: Ensure that your income meets the minimum annual and monthly thresholds defined by the lender.
6. LTV Ratio: LAP allows borrowing up to a certain percentage of the property’s value, typically up to 75%. This value is determined by property valuation.
7. Prepayment Charges: RBI has waived prepayment charges for floating interest rate LAP and capped penalties up to 3% for fixed-rate LAP. This change encourages borrowers to repay loans early, providing more financial flexibility.
8. Documents Required to Apply for LAP: When applying for a LAP, you’ll need to gather a set of crucial documents:

• Proof of Identity: Documents such as an Aadhaar card, passport, driving licence, or voter ID are required to verify your identity.
• Proof of Address: To establish your address, you can submit documents like a passport, electricity bill, or an Aadhaar Card.
• Property Documents: Copies of the original sale deed, allotment/possession letter and No-Objection Certificate (NOC) from the housing society or relevant authorities are necessary.
• Proof of Age: Your age can be verified using documents such as a passport or PAN Card.
• Income Proof: To showcase your income, you’ll need to provide documents like the latest Income Tax Return Certificate, Form 16, salary slips, audited financial sheets, certificates of practice (if applicable), qualification certificates, Shop Act License and Sales Tax Certificate.