What Are the Different Types of Housing Loans in India?
Easy home loans have made homeownership a possibility for citizens of all income groups. However, what many people are unaware of is that home loans are also tailor-made to suit different requirements. Knowing about each helps in making an informed decision. Given below are the most common types of home loans offered in India.
Known as the most basic type of home loan, a home-purchase loan allows a borrower to purchase a ready-to-move-in residential property of their choice – flats, bungalows, condos, etc. Home loan interest rates for such loans can be fixed or floating. Lenders offer at least 80 to 85% of the property’s market value as home loan.
Home improvement loan
Home loans are also offered to individuals who own a home but do not have sufficient funds to renovate it. This renovation or revamping could include – repainting of walls, electrical wiring and earthing, water-proofing, conducting repairs, etc.
Home construction loan
Specific individuals may have a plot of land under their name, but not enough funds to build a property upon it. For such individuals, lending institutions offer a separate kind of housing loan known as the home construction loan. Moreover, borrowers can take such a home loan online even for unfinished property construction owing to lack of funds.
However, there may be particular clauses attached to availing a home loan for construction. For instance, the land must not be purchased more than a year from loan application, and the applicant needs to provide a rough estimate of the costs that may be incurred in home construction, etc.
Land-purchase loans/plot loan
Home loans are not merely limited to the purchase of ready-to-move-in or under-construction properties. They can even be availed by those who wish to purchase a vacant plot of land. Purchasing a plot allows you to build later a house that is uniquely yours. Even for such a housing loan, lenders generally offer 80 to 85% of the market value of the plot.
Home extension loans
This type of home loan also comes as a surprise to many aspirants – you can apply for home loan even for purposes of expanding or extending your existing property. Some lenders offer this as a separate loan type, while others include this funding under home improvement loan.
NRI home loan
This type is categorised based on the applicant, and not loan purpose. Non-Resident Indians (NRIs) planning on buying a house in their home country can also avail easy home loans. As long as they meet the home loan eligibility criteria and submit the required documents, lenders will allow such individuals to avail all the different types of loans for homes.
As the name itself suggests, this type of home loan is taken to bridge any mismatch in cash flow. It is usually a short-term loan taken during a period between the purchase of a new house and the sale of the existing one. The home loan interest to be paid on such loans is generally substantial due to high ROIs.
Are you planning to take any of the home loans mentioned above? If yes, make sure to check your eligibility and monthly EMIs. Useful home loans calculators will make your task easier. With an online calculator for eligibility, you can find out the principal loan amount you are eligible for and a home loan EMI calculator will accurately let you know your EMI amount in seconds.