Essential Features that You Need To Know About Home Extension Loan
By Anupama Deshpande | Oct 12, 2018

People always want to buy their dream home which is big, spacious and is full of all the standard facilities but it is not possible for everyone to acquire all the things against the available financial resources with him so he is required to settle down with the house which fits into his budget and it is felt that the remaining things can be done later in his life.

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Need for bigger and additional space is realised when growing needs of you and your family warrant the expansion of your home. You may come across this need when your children grow up and want to have their separate rooms or when parents come to live with you or you want a special pooja room. This is the time when you want to extend the existing house.

Extension of your home also needs funds and you can get the required fund by applying for a Home Extension Loan which is a special category loan offered by the lenders for extending home. Home Extension Loan is designed to keep these special needs in mind and is specifically customized to suit your requirements.

Outlined below are the essential features what you need to know about home extension loan:

Anybody in whose name the property is, whether existing customer or a new customer, can apply for it provided he has repaying capacity and a healthy credit score. If he is already an existing home loan borrower, he is eligible to get home extension loan and the advantage here is that loan disbursal process will be very quick as lesser documentation is required in case of existing customers.

The loan tenure offered for the home extension loan can be maximum of up to 20 years. Though the age of the applicant, credit score, income, outstanding period of the existing home loan and other factors are also considered by the lender to decide the tenure.

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Interest rates for home extension loan are approximately equal to home loan interest rates. The rate of interest vary from lender to lender and is also determined after keeping in mind the age of the applicant, income, employer category, loan tenure, etc.

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As per the Income Tax Act 1961, the current applicable exemption under section 24(b) is Rs. 2,00,000 for the interest amount paid in a financial year and up to Rs. 1,50,000 under section 80C for the principal amount repaid in the in a financial year.

As per the new guidelines issued by the Reserve Bank of India (RBI) banks are forbidden to impose prepayment penalty on prepayment of loans under floating rate regime. So there will not be any penalty in case you prepay the loan amount.

If you are planning to expand your home to accomplish your family needs, you can consider home extension loan which will be available at an attractive interest rate, required tenure and with an ease.