Everyone today dreams of having own home, but buying a house is not an easy task as it involves deep research and arrangement of money. The rise in prices of the property also made this process difficult. Home loans are popular and attractive means of buying a dream home as it solves the problem that arises due to lack of funds. Every day numerous people apply for home loans to own a perfect home for themselves. There are many home loan options offered by private or national banks and non-banking financial companies in India. You need to understand all the options available and to decide which one is best for you based on your need. Lenders or financial institutes provide home loans not only for purchasing a home, but also for a variety of other purposes. The following are some popular types of home loans available in the Indian financial market:
Land or Plot Purchase loan:
NBFCS or Banks offer Land purchase loans to buy a land or plot on which a loan applicant wishes to construct a house. Most Banks offer up to 80-85% of the price of the land. These loans can be used for both residential and for investment purposes. This type of loan is offered by almost all leading banks.
Home purchase loan:
Home purchase loan is the most popular and most commonly available types of loan used for purchasing a new or pre-owned home. Banks or financial institutes usually provides 85% of the market value of the house as loan amount. These loans are provided either at floating interest rates or fixed interest rates or as hybrid loans, and generally ranges anywhere between 9.85% and 11.25%. All housing finance companies and banking institutions provide this type of loan.
Home improvement loan:
Home improvement loan also known as Home renovation loan is taken by an individual who owns a house but has no funds to renovate it. All types of repair and renovation works can be financed using this loan, such as electrical work, construction of overhead or underground water tank, external repair works, internal and external painting, digging a bore well, waterproofing, installing new tiles certainly make your house look better.
Home construction loan:
This type of loan can be used by the persons who wish to construct a house according to their needs rather than buying an already constructed one. The Application and approval process for this type of loan is compared to the commonly available housing loans. The most important thing when applying for this type of loan is that the land must have been purchased within a year for the plot cost also to be added to the loan amount. The amount of the loan decided to depend upon the rough estimate of the cost that will be used for the construction of the house. The loan amount may be disbursed in one go or in several installments. Many banks/ housing finance companies offer home construction loan.
Home extension loan:
Home extension loans are taken by the person who wants to extend or expand their existing house. The expansion includes alteration in the current structure of the house and construction of a bigger bathroom, a new room, an extra floor or enclosing a balcony. Some banks offer loans for the same purposes, but they call it as a home improvement loan. It depends on how banks differentiate their loans. You can take this type of loan from banks or housing finance companies of your choice.
Apart from above-stated types of loans, people can also get other types of Home loans like Home-conversion loans, NRI-home loans, Balance transfer Home loans, Bridged loans, Stamp duty loans. Choose the right type of home loan based on your requirement. It will not only simplify the loan approval process but also reduces the paperwork.