Home Loan For Resale Flats: Financing Your Dream

Owning a home is a dream shared by many Indians, and purchasing a resale flat can be an excellent way to turn that dream into reality. However, most of us require financial assistance in the form of a home loan to make this possible. 

In this comprehensive guide, we will take you through the process of obtaining a home loan for resale flats in India. We will also discuss the eligibility criteria, documents required, tax benefits, and repayment options. 

Eligibility For A Home Loan For Resale Flats

To qualify for a housing loan for a resale flat, there are certain eligibility criteria that you need to meet. Lenders consider your income, age, and credit score when determining your eligibility for a home loan.

• Income criteria: Lenders use the Debt-to-Income (DTI) ratio to assess whether you can manage the loan repayments efficiently. Aim to keep your DTI ratio as low as possible by minimising your total monthly debt obligations in relation to your gross monthly income.
• Age criteria: Most lenders, including NBFCs, prefer borrowers between the ages of 20 and 65. However, age limits may vary depending on the lending institution's policies or your work profile.
• Credit score: Maintaining a healthy credit score is crucial for securing a housing loan. A high credit score indicates responsible financial behaviour and enhances your chances of loan approval. 

Documents Required For A Home Loan For Resale Flats

To streamline the housing loan application process, make sure you have the following documents ready:

1. Identity and address proof:

• Aadhaar Card
• Passport
• Voter ID
• Driving license

2. Income proof:

• Salary slips (Last 3-6 months)
• Income Tax Returns (ITR) for the past 2-3 years
• Form 16
• Bank statements (Last 6 months)

3. Property documents:

• Sale Deed
• Sale agreement
• Property tax receipts
• Approved building plan
• Encumbrance certificate

4. Employment and business proof:

• Employment certificate (for salaried individuals)
• Business proof (for self-employed individuals)
• Business registration certificate (for business owners)

Tax Benefits On A Home Loan For Resale Flats

Opting for a home loan for your resale flat can provide you with significant tax benefits. Let's look at some key deductions:

• Tax deduction on home loan interest (Section 24): Under Section 24 of the Income Tax Act, you can claim a deduction of up to Rs. 2 lakh per financial year on the interest paid for your home loan. However, there is no limit on the interest deduction for properties that are not self-occupied.
• Tax deduction on home loan principal repayment (Section 80C): Section 80C allows you to claim a deduction of up to Rs. 1.5 lakh per financial year on the principal repayment amount of your home loan, offering benefits for those seeking deductions on repayment of housing loan 80c. This deduction also applies to stamp duty and registration charges.
• Joint home loan tax benefits: If you are co-borrowing a home loan with a family member, both borrowers can individually claim deductions on the interest and principal repayments subject to specified limits.
• Pre-construction interest: If your resale flat undergoes renovation or reconstruction, you can claim a deduction on the pre-construction interest paid during the construction period. This benefit can be availed in five equal instalments from the year of completion.

Repayment Options And Prepayment Benefits

Before finalising your housing loan for a resale flat, it's essential to inquire about the prepayment and foreclosure options offered by the lender.

• Prepayment: Many lenders allow partial prepayments without charging any penalties, enabling you to make additional payments towards your home loan principal. 
• Foreclosure: Foreclosure involves complete repayment of the home loan before its original tenure ends. Some lenders may charge a foreclosure penalty, while others may offer it without charges after a specific period.

Conclusion

Purchasing a resale flat through a home loan is an excellent way to fulfil your dream of owning a home. Consider factors like eligibility for a home loan criteria, required documents, tax benefits, home loan interest rate, and repayment options when choosing a lender. 

Mahindra Finance understands your aspirations and offers housing loan tailored to your needs. What's more? With Mahindra Finance, you can select monthly, quarterly, or half-yearly instalments and make repayments through various online and offline payment options.

FAQs

1) What are the eligibility criteria for a home loan for resale flats?

To be eligible for a home loan for resale flats, lenders consider factors such as income, age, and credit score. 

2) Can I claim tax benefits on the principal repayment of my home loan?

Yes, under Section 80C of the Income Tax Act, you can claim tax deductions on the principal repayment amount of your home loan for resale flats, making it advantageous for those seeking deductions on repayment of housing loan 80c.

3) How can I calculate my Equated Monthly Instalments (EMIs)?

Use an online housing loan calculator to calculate your EMIs based on the loan amount, interest rate, and tenure. This will help you plan your finances better.

4) What is stamp duty on resale flat; ow does it impact the purchase?

Stamp duty is a fee levied by the state government on property registration documents. It is mandatory and varies from one state to another. Stamp duty on resale flat needs to be paid to legally claim ownership of the property.