regular home loan

Buying a home has now turned into a benchmark for settling down in India. Many people in the nation holding their dream for buying a property. However, due to the unstoppable and significant growth of real estate has essentially increasing the demand for Home Loans in the country.

The most common loan taken by people to realize their ambition of owning a home in a regular home loan product.

It’s a kind of loan that enables you to obtain cash from the lender to pay for the property of your choice. You can then pay back the loan to the lender in monthly instalments after owning the property.

Nationalized bank offering Regular home loan category followed by EBLR product (EXTERNAL BENCH MARK LENDING RATE) in particular

External bench mark lending rate (EBLR) was the latest interest rate product which was following by public sector banks against RPLR (Retail prime lending rate) following by NBFC’s.

In regular home loan product The Bank may approve a home loan for up to 80%–90% of the cost of the property if you meet the income eligibility for the loan.


  • Huge amount in lower rate of interest

Getting huge amount of cash as a home loan in lower Rate of interest when compare to other type of loans is one of the best advantage in home loan.

  • High repayment Tenure

Among all types of loan, Only home loan having high repayment Tenure which goes up to 30 years, so one can reduce the burden of equated monthly installments by extending the tenure

  • Property scrutinization

Public sector banks have very good legal experts to verify the title deed documents of the property which is very important as it is your lifetime investment. So that the property can be inherited by your sibling without any problem. But private sector banks can compromise on that and sanction loans as per your repaying capacity.

  • Tax benefits

An individual is eligible to claim a deduction of up to Rs 1.5 lakh in principle amount under Section 80C of Income Tax of India 1971 Act in a financial year.  While a deduction of up to Rs 2 lakh in interest portion is allowed to be claimed under Section 24B of Income Tax of India Act.

  • Pre-closure and part-payment

In public sector bank there is No pre-closure (or) pre-payment charges towards the taken loan. So, whenever you have extra cash, you can use it to reduce your loan outstanding amount by paying it through online

  • Interest amount

Huge amount can be paid as interest portion if we fail to make a part payment in a regular interval towards the loan account. So, before processing for a home loan choose the right bank and product which was allowing you to make a part payment through online facility without any restriction with daily diminishing interest calculation.

  • Change in interest rate

Currently RBI updating the rate of interest (increase or decrease) for every quarter subject to all banks. But Many of the Non-banking finance corporation’s (NBFC) and private sector banks will raise the rate of interest when it increased but will fail to reduce the interest once it down. So, before processing the home loan we need to verify the history of the banks particularly in their transparency regarding the home loan rate of interest revision. Otherwise we will lose huge amount without knowing the reason which is technically called as hidden charges.

  • Long term commitment

A home loan EMI is a duty for those who enjoy spending money frequently for travel abroad or domestically. Their budget will need to be more efficient because they need to spend maximum portion of their income to pay their EMIs. Use the home loan calculator to determine your affordable EMI if you have a limited budget.

  • Loss of Investment opportunity

One of the biggest disadvantage of home loans is loss of investment opportunities. Once  after taking home loan we will spend our maximum financial strength to close that particular loan by repayment which includes interest and principle. Due to this activity we will miss to invest in some other financial instrument, a high rate of return can be earned. It is an opportunity that many people fail to consider.

  • Loss of tax benefit on the HRA component

In India, Government allows employers to pay housing Rent Allowance or HRA to the employees as part of their salary and this HRA part allows the employees to claim a tax deduction for the rent they pay for their living. As a result, if you live in your own home, you are unable to claim the HRA exemption and the full amount would be regarded as taxable income.

Using a housing loan effectively can help you manage your finances efficiently. Here are some tips to use a housing loan effectively:

1. Determine Affordability: Before applying for a housing loan, assess your financial situation and determine how much you can afford to borrow. Consider your monthly income, expenses, and other financial commitments.

2. Research Interest Rates: Compare interest rates offered by various lenders to secure the most favourable deal. Even a small difference in interest rates can significantly impact your overall loan repayment.

3. Loan Tenure: Choose a loan tenure that suits your financial capabilities. A longer tenure results in smaller EMIs (Equated Monthly Installments) but may lead to higher interest payments over time. A shorter tenure may have higher EMIs but reduces the overall interest burden.

4. Online part payment facility: Ensure online part payment option is available with the chosen borrower (bank) without any condition or restriction. This can reduce your overall interest repayment throughout the tenure in daily diminishing calculation method with your monthly accrued interest.

5. Prepayment Option: Inquire about prepayment options to make part payments or foreclose the loan before the loan tenure ends. This can help you save on interest and reduce the loan burden.

6. Avoid Over borrowing: Only borrow what is necessary for purchasing the property. Avoid taking a larger loan solely based on your eligibility if you don't require the extra funds.

7. Maintain a Good Credit Score: A good credit score increases your chances of getting a housing loan with a lower interest rate. Pay bills and EMIs on time to maintain a healthy credit score.

8. EMI Calculation: Calculate the EMIs using online EMI calculators to understand the monthly repayment amount and plan your budget accordingly.

9. Emergency Fund: While taking a housing loan, ensure you have an emergency fund to meet unforeseen expenses. This will prevent you from defaulting on EMIs during tough times.

10. Insurance Coverage: Consider opting for home loan insurance or mortgage insurance to protect your family from the burden of loan repayment in case of any unfortunate events.

11. Invest Surplus Funds: If you have surplus funds, consider investing them wisely rather than using them to prepay the loan. Evaluate the returns from investment against the interest cost of the loan.

12. Tax Benefits: Be aware of the tax benefits available on the principal amount and interest paid on the housing loan under Section 80C and Section 24(b) of the Income Tax Act, respectively.

13. Use Loan for Asset Building: Use the housing loan to purchase an appreciating asset (property) rather than spending it on consumables or depreciating assets.

14. Monitor Loan Account: Keep track of your loan account regularly to ensure accurate billing and timely payment of EMIs.

15. Refinancing: Evaluate the option of loan refinancing if you find better interest rates or terms offered by another lender.