Purchasing a property is regarded as a significant milestone in one’s life as homeownership brings a sense of sustainability and stability.
While buying a house is considered a demanding task in India due to the rising real estate prices, one can realize their vision of finding the perfect abode with the introduction of different types of home loans by various financial institutions.
Even if it may seem that you are capable enough to fund the house purchase with your savings, it is recommended to avail of a home loan for maintaining financial stability.
Due to the availability of multiple home loans, one should perform intensive research and evaluate their requirements to ensure that they pick the loan best suited to them. Offered at an affordable rate of interest, a home loan could be easily acquired from a financial institution upon comparing and assessing multiple associated parameters including loan amount, tenure, and EMI amount through a house loan calculator.
Hence, one should gather sufficient information about different home loans before finalizing one that will help you settle down in your dream home.
Read on to know about the 5 different types of home loans in India.
1. Regular loan for purchasing home or land
The most common home loan is for buying a residential or commercial property such as an apartment, bungalow, shop, or any office space which may be ready to move, currently under construction, or up for resale by the previous owner.
Depending upon the eligibility and requirement, one can easily acquire a loan up to 80% of the property’s market price, which can be repaid through equated monthly installments (EMIs) over a fixed tenure. Similarly, one could avail a loan for purchasing a piece of land to construct a house later or solely for investment purposes.
2. Home construction loan
This housing loan is designed to help the owners build their dream home on pre-owned land or plot, at their convenience. A key clause associated with such kind of loan is that the plot must be purchased within a year as the loan amount is evaluated based on the price of the land acquired by the borrower.
3. Home expansion or renovation loan
When funds are borrowed to finance an extension or improvement to a home such as constructing new rooms, adding a balcony, etc., it is called a home expansion loan. Conversely, one could also acquire a lump sum of money from a financial institution to fix the leaky ceiling, repair or remodel the kitchen and bathrooms, or re-paint the house with the help of a home improvement loan.
4. Home conversion loan
While repaying an existing loan, if the owner wants to sell the current house and purchase a new one, then they could opt for a home conversion loan. In such cases, the current loan is being transferred to buy the new house and one does not need to look for a new lender or loan to finance the latest property purchase.
5. Balance transfer home loan
Lastly, when a person wants to transfer the home loan from one bank to another for availing of low-interest rates or additional benefits and facilities, they could apply for a balance transfer home loan.