Here are 9 types of home loan you can avail in India
With a home loan, you can purchase the home of your dreams. The interest rates are much lower than other loans, making it a viable option for many individuals. But to make the most of a home loan, finding a reliable funding partner is critical.
Choose the option that works best for you to acquire the amount you need. It’s to your advantage to be aware of these options and the ensuing interest rates. Read on to learn more about the many types of home loans available in India and how to choose the best one.
Nine different types of home loans in India
- Home loan for land purchase
You may be able to receive a bank loan to pay for the land on which you intend to construct a home. You may be eligible for home loan benefits after the construction is completed. Most lenders will lend up to 85% of the land’s worth when the loan application is submitted. As a result, all borrowers must put down 10-15% of the land’s worth.
- Loan to purchase a home
People looking to purchase a new house may get a home loan from a bank or NBFC. Before you apply for a home loan, you should decide if you qualify for one and whether you can afford the EMIs.
- Loan for the construction of a house
Home-construction loans are available to persons who wish to build a home on land they own or share with others. In this scenario, the amount that a lender is ready to provide as a home loan depends on estimates of how much money would be spent for the construction.
- Home improvement or home renovation home loan
Homeowners who wish to renovate their property but need more funds might get a home loan. Fixing up an old home, repainting the walls, installing new light fixtures, and so on are all examples of potential remodelling tasks. The type of home loan is structured as follows:
- You will provide the lender with an estimate of the cost of the work.
- To validate the estimate, the lender will request a quotation from the contractor.
- The contractor gets paid regularly depending on how quickly the construction project progresses.
- Home conversion loan
People who currently have a loan but wish to sell their present home and acquire a new one may be eligible for a “house conversion loan.” Borrowers may use this housing financing to refinance their existing types of home loans into a loan secured by the house they intend to purchase. They are not required to repay the amount or find another lender. This home loan option has a higher interest rate than the average.
- Mortgages and Non-Resident home loan
This home loan is designed for persons who reside outside India yet wish to purchase a property there. In India, there are several house loans, each with its application procedure and list of necessary papers. However, the structure of this mortgage loan is fairly similar to that of other loans.
- Bridge Loan
A “bridge loan” is a short-term loan accessible to homeowners who wish to purchase a new house but must sell their present one. You may get a loan and use the proceeds to make a down payment on a new house before the sale of your present one is completed. These types of loans have very high-interest rates and are only available for up to two years.
- Mortgage Balance loan
You may request that any outstanding amount be transferred to another bank or NBFC. When borrowers discover a better top-up facility and interest rate with another lender, they often transfer the remainder of their mortgage to that institution. Apply for types of home loans when you have their full knowledge.
- PMAY (Pradhan Mantri Awas Yojana)
The Pradhan Mantri Awas Yojana was launched in 2015 to provide a home for everyone. The Credit Linked Subsidy Scheme (CLSS) was established as part of this initiative to provide borrowers with a discount on mortgages and other home loans for house renovations. Those who take out a mortgage loan under this CLSS scheme may be eligible for an interest discount of up to Rs. 2.67 lakh.
Consider a few things before applying for a home loan
Nowadays, getting a house loan from a bank or NBFC is simple. Getting this loan is rather simple if you have all the vital papers. Because home loan often entails a large sum of money and a longer loan tenure, lenders will look at every aspect of the borrower. However, as the borrower, you must be cautious about your capacity to repay the loan.
You must meet the rules before applying for a home loan
To check whether you qualify for a loan, use one of the numerous online home loan eligibility calculators. You may use these calculators to see how much you can borrow. Knowing this figure ahead of time allows you to arrange your finances better. Your maximum loan amount will be calculated automatically based on the information you provide about your income, spending habits, where you reside, and other factors.
Examine the market’s many booths and traders:
- Remember that you would have to pay for items other than the EMIs.
- So consider what you can do about it.
Interest rates and the amount of time it takes to repay a loan are related. A reduced interest rate and a shorter repayment time are offered to promote early payment. However, if you choose to repay the loan slowly, the lender will charge a higher interest rate for all types of home loans. If you want to keep your total financing costs as low as possible, choose a loan tenure that is as short as possible.
Summing up
People who wish to borrow money in India should do their homework since there are several home loan options. This will allow them to choose the one that best matches their budget. Before making a final decision on the best types of home loans, you should look at the various interest rates and EMI payment options. For the best home loan deals, get in touch with Piramal Finance. They also offer many articles and blogs to help improve your finance skills.