Types of Home Loans in India
The country’s population have a dream of settling in their own dream home at any cost. That is what we crave for at the end of the day and to achieve the dream is not at all easy. With massive prices for properties, owning a home takes a lifetime’s savings and sometimes future commitment that lasts over decades. But there are home loans to aid the people who find it very hard to fund it out of their own pockets. Banks today provide various kinds of home loans to cater different requirements of different types of people in the society. There are also specially designed home loans for women and farmers. Mr. Suresh, who wanted to purchase one of the flats for sale in Pallavaram, says he did not know about these types of loans when he researched and found about them online. There are different types of home loans provided by financial institutions and they are:
1. Conventional home loans:
This is the most commonly availed loan, which is for buying a new or a pre-owned house. Interest rates for these loans vary between 9% and 12% and there are different variants like floating and fixed rates of interest. Banks in India lend up to 85% of the total cost of the home as a loan.
2. House construction loans:
When one wants to build a home as per their wishes in a plot, then they can avail a home construction loan. Cost of the plot is also taken into consideration for the approval process of this loan and the plot must have been purchased within a year for the same. The loan is provided at once or in numerous installments and it is based on an estimate of the building cost.
3. Loans for expansion:
Some might want additional features in the home like an extra bedroom or a balcony. Banks also provide loans for alteration, expansion, and construction of new structures to the home. If someone wants to restructure their flats in Tambaram with a balcony, they can avail this kind of loan from several banks.
4. Land purchase loans:
One can avail a loan for buying a land and the borrower can either build the dream home or keep the land as an investment. Some major banks in India lend up to 85% of the total cost of the land as a loan.
5. Home improvement loans:
One can also get loans for improvement and renovation works like painting, repairs, constructing a water tank and major electrical reworks.
6. Home loans for NRIs:
Even Non-Resident Indians can avail loans from private and public banks for buying a property in India. Only the formalities and the application process differ in this type of loan.
7. Loans for home conversion:
It is also possible to transfer the present loan of one property to another if the borrower wants to move from the purchased home to another one. By doing this, the borrower can buy a new home without having to repay the loan for the previous one.
8. Short term bridged loans:
These are short-term loans for existing homeowners who want to buy a new one and sell the old property. The borrower can use it to purchase a new house until a prospective buyer is found for the old one.
9. Loans for stamp duty:
It is also possible to avail loans to cover the stamp duty fees that are levied on the buyer during the purchase of the property.
10. Balance transfer of home loans:
Transfer of home loan from one bank to another is also possible. This is done to avail the benefits of low-interest rates and quality services from another bank. With all these variants in home loans, it is vital to consider the requirements and needs before opting for one. This would make the process much clearer, simpler and easier.