A home loan is a type of financial loan provided by banks, housing finance companies, or other lending institutions specifically for purchasing, constructing, or renovating a residential property. It allows individuals to buy a house without paying the full price upfront by borrowing money and repaying it in installments over a fixed tenure with interest. Key Features of a Home Loan 1. Purpose Home loans are primarily used to: Purchase a new or resale house or apartment Construct a house on owned land Renovate or repair an existing residential property Buy a plot of land (sometimes covered under home loans or separate land loans) 2. Loan Amount The amount sanctioned depends on factors like: The borrower’s income and repayment capacity The value of the property (usually up to 75%-90% of the property’s market value) Credit score and eligibility of the borrower 3. Security (Collateral) Most home loans are secured loans, meaning the property being purchased is pledged as collateral. This reduces the risk for the lender. 4. Interest Rates Home loans carry interest, which can be: Fixed Rate: The interest rate remains constant during the tenure. Floating Rate: The interest rate fluctuates based on market benchmarks like RBI’s repo rate or MCLR. 5. Repayment Tenure The repayment period typically ranges from 5 to 30 years, depending on the borrower’s preference and lender’s policy. 6. EMI (Equated Monthly Installment) Borrowers repay the loan through EMIs, which include both principal and interest components. 7. Tax Benefits Under Indian tax laws, borrowers can avail of deductions on principal repayment and interest paid under Sections 80C and 24(b) of the Income Tax Act, encouraging home ownership. Summary A home loan is a secured loan aimed at financing residential property purchase or construction. It offers a large loan amount repayable over many years with interest, often providing tax advantages, making owning a home financially feasible for many people.