The three most important things to know about house loans

by Litty Jose Finance Analyst

Home loan tax benefits can be quite a daunting thing to understand. For someone who is not familiar with financial terms and regulations, the topic of house loan and tax benefits can truly send them over the edge. But in India, property is said to be the best investment and to own property you need to understand how house loans work.

Home loan EMI calculator is the most important thing you need to be familiar with before you get your house loans. EMIs are your monthly instalments that you have to pay towards repaying your loan. The second thing you need you know about house loans is home loan tax benefits.

The Income Tax Act has made provisions for home loan borrowers, so that they can finally fulfil their dream of having a home of their own. There are three sections in the Act that give you tax benefits on home loan. You should know these because they are handy tax saving calculators. Here’s what they are.

1. Section 80C: This section states that you can claim tax benefits of up to Rs 1.5 lakh on repayment of the principal amount of your loan.

2. Section 24: This section states that you can claim tax benefits of up to Rs 2 lakh on repayment of interest on housing loan but this is only applicable for a self-occupied property. If you are renting out your property then there is no maximum limit on the tax benefit amount. So, you can claim the entire interest amount as a tax benefit. You can do this even if the amount exceeds Rs 2 lakh.

3. Section 80EE: This section states that if you are a first-time buyer then you can claim an extra Rs 50,000 as tax benefits on the interest repayment.

Another thing to know about house loans is the Pradhan Mantri Awas Yojana. The PM Awas Yojana is an interest subsidy scheme that has been named as 'Credit Linked Subsidy Scheme for Middle Income Groups - CLSS (MIG)'. As per this new subsidy, middle-income groups with incomes in the eligible range will get a subsidy on their home loan interest rates of three to four percent. This scheme has been devised to ensure that more and more people can avail of home loans and fulfil their dreams of owning a home of their own.

If you want to get a house loan, it is now easier than ever to get it. You can simply go online and get yours. Owning a home of your own was never this easy.