What are the Different Types of Home Loans You Must Be Aware Of? 

What are the Different Types of Home Loans You Must Be Aware Of? 

 In India, being a settled individual is synonymous with being a homeowner. In the present busy day world, many of us dream of having a picture-perfect home where we may get complete solace towards the end of the day. Purchasing a house is also a herculean task nowadays due to the rising real estate prices. A home loan is one of the simplest ways to finance your home purchase, given that it is an unwise idea to burn your whole savings to purchase a home or land. 

Banks and various other housing finance companies provide distinct kinds of home loans nowadays. The demand for home loans has risen drastically in the current years, and individuals have distinct expectations when it comes to home loans. To cater for the needs of a distinct section of society, various banks have come up with the concept of introducing distinct home loan schemes. To state a few, various banks provide specially designed home loans for agriculturalists, women, and loans particularly for buying land. Not just private or public sector banks offer different kinds of home loans, but also other digital home loans like Navi Home Loan and Canfin home loan do the same. 

Different kinds of home loans –

Lenders provide home loans not just for purchasing a home but even for various other reasons. Few of the popular kinds of home loans available in the market include – 

Home loan for buying land – 

Various banks provide loans for purchasing land. Buying land is one of the flexible routes through which buyers can save excess funds and construct the home whenever their finances permit or just have the land according to investment. Nearly up to 85 per cent of the land cost is provided as a loan by most of the lenders, including Canfin Home Loan and Navi home loan. 

Loans for purchasing a home – 

One of the most common kinds of home loans is a loan for buying a pre-owned or new home. This kind of home loan is commonly available and offered by various banks in distinct variants. The rate of interest for such home loans is either fixed or floating and usually ranges anywhere between 9.85 per cent and 11.25 per cent p.a. Also, about 85 per cent of the overall amount is provided as a loan by many of the banks. 

Loan for home construction purposes – 

This loan is particularly designed for individuals who are looking to construct a place as per their wishes instead of purchasing a pre-constructed home. The loan approval procedure for this kind of loan is distinct as it takes into consideration the plot cost even. The most essential clause when placing an application for a home construction loan is the plot must be bought within a year. The amount for the loan is determined depending on a rough estimate of the construction cost. The amount might be disbursed at a single go or in numerous multiple instalments. Popular home construction credit options include schemes provided by UCO Bank, Bank of Baroda, and Canara Bank. 

A home extension or expansion loan – 

Are you looking for an additional bedroom or another balcony? No need to worry. Few banks even provide loans for home expansion, including alteration of present structure & new room construction. Home renovation loans by the Bank of Baroda and home extension loans offered by HDFC are popular loan categories.

Home conversion loan –

Those individuals who have already taken up a home loan and have bought a home through it but want to move to another new home can choose this option. By transferring the present loan to the new home, the borrower can finance the purchase of the new home and even need not pay the previous home loan. While it offers great convenience, this home loan segment is even extremely costly. 

Home loan for home improvement plan – 

Repair and renovation work includes internal and external repair, construction of overhead water tank, painting and electrical renovation that makes the home appear good. However, if you do not hold the required finances for renovation or repair, banks such as State Bank of India, Union Bank of India, Bank of India and others may offer a specialized kind of home improvement loan. 

Home loan for transfer of balance –

This home loan option can be taken up when the individual wants to transfer their home loan from one specific bank to another due to reasons such as lower rate of interest, better services offered by another bank etc. This is performed to repay the rest of the loan at a revised or lower rate of interest by another lender. 

Home loan for the NRIs –

Particularly designed to support the nonresidential Indians in purchasing a residential property, the application and formalities for this kind of loan are distinct from others. Usually, most public and private sector banks provide NRI loans as a product of their home loan portfolio.

Bridge loan – 

A Bridge home loan is a short-term credit option formed for the prevailing homeowners who are looking to buy a new home property. It helps you to finance the property of your new home till a homebuyer is identified for an existing property. This kind of home loan generally needs a mortgage of a new home with the bank and is extended for less than 2 years. Several lenders like HDFC bank, Bank of India, and State Bank of India may offer this loan type. 

Stamp duty loan –

Not widely called a segment of home loans, a stamp duty loan is provided to cover the stamp duty fees and charges during property purchase. 

With home loans becoming a new normal day by day, it is even necessary to identify your needs and apply for the correct home loan. Not just will this lower the paperwork and make home loan approval a simple task, but it will even permit you to enjoy a home loan at a lower rate of interest. Also, ensure to use a home loan EMI calculator to know about your amortization schedule as well as plan the finances in a better way.

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