Buying a home is one of the most essential decisions in anybody’s life. Most importantly, it makes you take the most crucial financial decision of life. Well, Home loan makes your journey simple by providing the needed financial support. However, you need all the pertinent information to make an informed decision. From knowledge about the real estate market to the legalities of home buying, taxation and tips on home loan; you need to have a good understanding. If you are planning to go for a housing loan it’s important for you to know about the types of home loan in India.
Types of Home Loan in India: How You May Avail
A regular legitimate source of income with a good credit history helps you in getting a home loan without much difficulty. However, as a borrower, you need to decide which type of loan you need. In India, there are many housing finance companies/banks/NBFCs offering home loans for a variety of purposes. You have the option of choosing from the various kinds of loans available as per your requirement.
The Most Common Types of Home Loan in India:
1. Home Purchase Loan
This loan is offered by financial organizations to the purchase of a new/ resale residential property. The lender generally gets up to 85 per cent of the market value of the proposed property. It is important to note that this is a secured loan. Consequently, the borrower needs to keep the property as the collateral for obtaining this loan.
2. Home Construction Loan
If you are looking to construct a house on a plot you already own you may choose to avail this loan. You need to submit a few important documents to avail this. These include the sale deed, approved building plan, and no-objection certificate (NOC) from the concerned authority. The basic norms you need to follow. Firstly, the land should have been bought within a year. Besides, a rough estimation of the cost for the construction needs to be submitted.
3. Bridged Loan
The bridge loan is a short term loan. If you are willing to purchase a new home while waiting for the sale of their existing home, this loan bridges the gap between old and new mortgages. You may tap the equity in the current residence as a down payment.
4. Home Extension Loan
As your family grow you need additional space. Hence, at times you want to extend your existing residential house as per your requirements. This loan is used to expand one’s existing house. Expansion can include extending terrace, adding a bedroom for your children, making a reading room for kids etc. However, it can be any kind of modification in the existing structure of the house to add extra space.
5. Home Improvement Loan
Your home reflects your style, your personality and your taste. However, renovating can be an expensive affair. Even if you are renovating (with no alteration of the structure/carpet area) your home say; flooring, internal / external plaster and painting, water-proofing, etc. you need cash. The home improvement loan is designed to help you upgrade your existing house with better looks.
6. NRI Home Loan
The loan as the name suggests is for Non-Resident Indians willing to invest in properties in India. Even if you have a sound financial state you may not possibly want to invest your personal funds. It makes sense to purchase a property through home loan. It is just needed to keep in mind that the paperwork involved is a bit elaborate one. However, almost every bank and NBFC provides this NRI home loan.
7. Home Loan Balance Transfer (One of The Types of Home Loan in India)
Hey! You find the current home loan interest rates taxing for you? Besides, it is also possible that you are unhappy with the services offered by the current lender. Subsequently, you wish to change the lender. Well, you have an option to transfer the home loan to another lender. Transfer it somewhere offering a lower home loan interest rate and better services. Besides, some finance companies in India even offer an option of a top- up loan besides the home loan amount. You may use this additional fund to execute any other financial need that you may have.
8. Land Purchase Loan
If you are looking to buy a piece of a plot to construct your dream home; you possibly need financial assistance. You may approach a bank or NBFC or a housing finance company to avail a land loan. Banks give this loan generally to buy residential plots. However, the clause is that the property should be within municipal or corporation limits. The maximum permissible loan to value for this is 70 per cent of the land price. The loan is normally approved for tenure of 15 years.
9. Stamp Duty Loan (One of The Types of Home Loan in India)
When you buy a new property, you need to pay a fee called stamp duty. This is levied by the state government. Accordingly, the authority charges this to validate the registration of your property in your name. You may necessitate financial support to pay off the stamp duty charges while purchasing a property. Calculate your stamp duty online and if you feel the need to borrow; approach a financial organisation.
To Sum Up
Banks and NBFCs offer home loans. This is not just to help you buy a home but also for a range of other purposes. You just need to have a good piece of knowledge about the various types of home loan available.
Also view Home Loan Repayments.
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