Since time immemorial, the fundamental requirements of humankind are determined; food, shelter and clothing. Over the years, these necessities have evolved, progressed and witnessed path-breaking changes. Considering ‘shelter’ for the time being, beginning from stony caves (for primitive man) to thatched hut to mud houses and finally to the age of bricks and concrete, the journey has been immensely progressive.

If we look back a decade ago, men used to stay together in large families, but with time and increasing member count, lack of space became prominent, which paved the way to a split following the rise of nuclear families. Also, out-station posting of the earning member of a family contributed as a major factor to the need of buying a new shelter.It is now not uncommon that almost all men wish to have a home of their own, often in addition to their ancestral lodging, a cozy and peaceful shelter where one would retire after the day’s work. However, the cost involved in buying/constructing a house, preferably in an urban locality is significant and mostly unaffordable for the common population. Hence, all nationalized and private banks offer credit known as ‘Home Loans’ to ensure property purchase made easy and hassle-free.

Home Loans, targeted to the procurement of real estate, serves the purpose of offering monetary credit/funds to the applicant, so that, initially, the required amount can be paid off to own a property. Initial processing steps include an interested customer to approach the bank and file a home loan application where the total loan amount is decided. The bank then imposes certain mandatory norms which are to be mutually agreed upon before the loan disbursal. Common norms include the interest rate applicable and the maximum loan tenure. Based on such parameters, the Equated Monthly Installment or EMI is calculated, which is the amount required to be repaid by the applicant to the bank over the decided tenure towards loan repayment. EMI calculation has been made user-friendly by launching websites and mobile applications (EMI calculator app) targeted towards this purpose. The Home Loan EMI Calculator considers the loan amount while tenure and interest rates are accepted as input parameters and the expected EMI amount pops up as the generated output. Interest rates can be chosen to be fixed or floating depending on the applicant’s decision. Fixed interest means that the EMI amount would remain constant over the entire loan tenure whereas, floating interest rates would vary depending on the market dynamics as per the yearly financial budget.

The number of individuals applying for home loans is on a rise because of its multi-benefits.With spiraling costs of rental apartments for meeting residential needs, more and more professionals are looking to secure their future by purchasing a home loan. Monthly installments offer lesser monetary pressure on the earning member as compared to cases where the individual clears off the entire debt instantly. Home loans also offer tax benefits for the applicants and are eligible for tax exemption under section 80(C) in the present Indian taxation system, against the interest paid to the bank (up to Rs.1.5 lakhs). However, a huge loan amount and tenure is often a liability for the applicant; hence, a judicious choice for both the parameters should be made prior to filing a loan application. Own homes not only have a sentimental value but also impart a great sense of accomplishment. Home loans are constantly playing a major role in supporting hundreds to achieve their dream.

By Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.

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