A home loan funds buying, building, extending or renovating a home. Understanding three ideas puts you ahead of most advisors.
RBI's LTV limits
- Loans up to ₹30 lakh: up to 90% of value
- ₹30 lakh to ₹75 lakh: up to 80%
- Above ₹75 lakh: up to 75%
The cash a buyer really needs
On a ₹60 lakh flat, the maximum loan is ₹48 lakh. Add ₹12 lakh of own contribution and about ₹3.5 to ₹4.5 lakh of stamp duty and registration, and the buyer needs about ₹16 lakh in cash. Lenders use their own valuation, which can be lower than the agreed price.
Why rates and tenure matter
On ₹50 lakh at 8.5% for 20 years, the EMI is about ₹43,391. If the rate rises to 8.75% and the EMI stays the same, the loan runs about a year longer. Paying ₹5,000 extra a month can save about ₹13.9 lakh of interest.
Tax, carefully
The Income-tax Act, 2025 applies from 1 April 2026, so section numbers have changed. In the old tax regime, interest on a self-occupied home can be deducted up to ₹2 lakh a year, and principal counts within the overall ₹1.5 lakh limit. The new regime, now the default, generally does not allow these for a self-occupied home. Always send customers to a CA.