1. What is Home Equity Credit?

Home equity credit in India allows homeowners to borrow against the equity in their property. It's a popular financing option for major expenses like home renovations, education, or medical bills, typically offering lower interest rates than personal loans.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)

Explanation: The formula accounts for compound interest over the loan term, calculating equal monthly payments that pay off both principal and interest.

3. Importance of Loan Calculation

Details: Accurate payment calculation helps borrowers understand their financial commitment, compare loan offers, and plan their budget accordingly.

4. Using the Calculator

Tips: Enter loan amount in ₹, annual interest rate (without % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is typical interest rate for home equity loans in India?
A: Rates typically range from 8.5% to 14% depending on lender, loan amount, and borrower's credit profile.

Q2: What is maximum loan-to-value ratio in India?
A: Most lenders offer up to 60-75% of the property's current market value as loan amount.

Q3: Are there tax benefits on home equity loans?
A: If used for home renovation/construction, interest may be deductible under Section 24(b) up to ₹2 lakh.

Q4: What is typical processing fee?
A: Usually 0.5% to 2% of loan amount plus GST, with minimum charges varying by lender.

Q5: How does this differ from a home loan top-up?
A: Home equity loans are separate from original home loan, while top-ups are additional amounts on existing home loan.