Home Loan FAQs

Yes, transferring a home loan to another person during the sale of the property is possible. This process involves the new buyer taking responsibility for the existing loan. Buyers must meet the lender’s qualifying requirements, which include financial reliability and income stability. The process comprises acquiring a foreclosure letter from the present lender, applying for a new loan with the same lender, and submitting relevant paperwork. These documents include a No Objection Certificate (NOC) from the developer or authorities and the buyer’s KYC and income proofs. The lender will undertake legal and technical reviews on the property. If authorised, the lender pays the loan amount to the seller, transferring property ownership and loan liability to the purchaser. It is important to consult with the lender to determine the exact requirements and related fees.

When applying for a home loan in India, lenders want specific property documents to confirm ownership and legal status. The Title Deed guarantees ownership and legitimacy, and the Sale Agreement contains the parameters agreed upon by the buyer and seller. A No Objection Certificate (NOC) from the relevant authorities or housing society verifies that there are no objections to the sale. The Encumbrance Certificate shows that there are no legal dues on the property. Approved building plans and property tax receipts indicate regulatory compliance and payment of dues. The occupation Certificate also confirms that the property is ready for occupation, while the Allotment Letter and Possession Certificate suggest that the buyer has taken possession. These documents are required for the loan process and help lenders determine the property’s validity.

Yes, you can simultaneously claim the House Rent Allowance (HRA) exemption and the home loan tax deduction under specific conditions. This is particularly relevant if you own a house in one city but live in rented housing in another due to work. In such instances, you can claim an HRA exemption for the rent paid and tax benefits on the house loan for the owned property. If you own a home in the same city but live in a rental property for legitimate reasons, such as proximity to your business, you may qualify for both benefits. To support your claims, it is important to have relevant documentation, such as rent receipts and loan certificates.

To close your home loan early, contact your lender to determine the outstanding balance, including applicable costs. Review your loan agreement to understand the prepayment terms  (individual borrowers with floating-rate loans are often excluded from prepayment charges under RBI rules). Once you have the necessary funds, visit the lender’s branch or, if accessible, use online prepayment methods to settle the loan. After payment, request a No Dues Certificate to ensure no outstanding debts. Ensure that your lender informs credit bureaus of your loan closure so that it is reflected positively. Finally, request any original property documents from the lender for your records. Follow these procedures to close your home loan early.

To claim tax deductions on your home loan, include the principal and interest components in your Income Tax Return. Under Section 80C, you can deduct up to ₹1.5 lakh per year on principal repayments—ensure this is included in the ‘Deductions’ section. Keep documents like the loan sanction letter and repayment certificate as proof.

Under Section 24(b), you can claim a deduction of up to ₹2 lakh per year on home loan interest for self-occupied homes and the full interest amount for rental properties. This should be reported as ‘Income from House Property.’ If eligible, first-time homeowners can deduct up to ₹1.5 lakhs in interest under Section 80EEA. By combining these deductions, eligible taxpayers can claim up to ₹3.5 lakh annually on home loan interest payments.

Withdrawing from your Provident Fund (PF) to settle a home loan can bring immediate financial relief, but it should be done wisely. Employees’ Provident Fund Organisation (EPFO) members can withdraw up to 90% of their PF balance for home loan repayment if they have at least three years of employment. The biggest benefit is quick access to funds, which can help reduce or remove outstanding home loan debt and eliminate interest rates. This withdrawal reduces your retirement assets, thus harming your long-term financial security. There may also be penalties for taxes if the withdrawal occurs before five years of continuous service. 

Property insurance is not required in India to secure a home loan. However, many lenders recommend it to protect from potential dangers such as fire, natural disasters, and other damages. This insurance protects the property’s value and secures the lender’s interest. While it is not a legal requirement, acquiring property insurance is recommended since it provides financial security for both the borrower and the lender. It is important to remember that while lenders may need property insurance, borrowers can select their insurance provider and are not required to choose the lender’s recommended insurance.