One of the best ways to buy a dream home is by getting a home loan. Banks offer home loans to people who want to purchase a house but don’t have money for it. The real estate prices are rising in the country. It is difficult for many people to buy their dream home. However, banks make that happen by giving home loans to people.
A home is one of the most important things in our life. However, many people find it difficult to buy a house. A home loan offers financial assistance to such people. It helps them get their dream home without having the burden of arranging a huge lump-sum amount.
There are factors that impact a home loan-
- Person’s Debt
There are no problems if a person has many loans. However, it is important that they pay them back in time. If a person who wants to get a home loan isn’t paying their other loans in time, then the banks can reject the loan. Factors such as failing to pay, paying after the duration, unpaid loans impact a borrower’s credibility. The banks tend to approve loans of people who pay their loans in time.
- Credit Score
It is important to have a good credit score. The credit score of a person has a significant impact on the interest rate. Banks look at factors such as credit history, unpaid loans, existing loans, etc. to know if a borrower can repay the loan.
- Person’s Employment
If a person is employed with a big company or government body, then the credibility of the person increases. Employment status is important to the banks. People who are earning profits can get a home loan much easily.
- Person’s Income
A person’s income is very important to the banks while approving a loan application. It is easier for a home loan borrower with a high income to repay the loan. Similarly, the city of residence is also important. A person living in Mumbai needs to have a high income compared to a person living in Kanpur as the expenses are higher.
Age is another important factor that impacts a home loan. If a person files for a loan at a young age, then the bank can approve the loan fast as it knows that the borrower has many years to repay the loan.
The benefits of a home loan are-
Different loans have charges when the borrower prepays it. However, a person who has borrowed a home loan can prepay it. If a person has money, then they can prepay it. However, such a facility is only for people who have borrowed loans at a floating rate.
- Tax Benefits
A home loan also offers tax benefits to the borrowers. The government wants to increase homeowners, which is why they offer tax benefits. A person can file for tax deductions on the interest and the principal. A home loan borrower can get a tax deduction of up to Rs. 1.5 Lakh as per the Section 80C if in case the house needs to be constructed.
- Loan Transfer
If a bank offers a home loan at a low-interest rate, then the borrower can transfer their home loan.