Everyone aspires to own a home but it is not in everyone’s capacity to financially own it, wherein they have to borrow money from the lenders. To meet these demands there are various home loans provided by private banks, public sector undertakings and NBFCs. Over the past 10 years, the demand for a home loan has increased and further, the demand is expected to go up from the present 28 percent to 40 percent by 2025.
What is Home Loan?
A home loan which is also called a mortgage loan, is a measure of cash obtained by an individual, normally from banks and organizations that loan cash. The borrower needs to take care of the credit sum with enthusiasm for Easy Monthly Installments or EMI’s over some stretch of time that can change between 10-30 years relying upon the idea of the advance.
Here is the list of 9 types of home loans provided in India:-
- Home Purchase Loans
This is the most common type of home loan available in the market. Home Purchase loan is taken to purchase a new home in any form (even if it is under construction) or old home from its previous owner. Such loans are provided within a range of Rs 2 Lakh to Rs 200 Lakh depending on the individual’s income and capacity to repay the loan. To avail the loan you only need to submit a few necessary documents.
- Home Construction Loans
This is the best type of a loan who wants to construct a house on land rather than buy a ready-to-move-in space. The procedure to avail this loan is different from other types of home loan. In the process to avail the loan you have to roughly estimate the cost which will be incurred in the construction of the house and then apply. It is important to buy the plot where construction will take place within one year from the application date so that total cost can be calculated.
- Home Extension Loans
It is quite clear from the name of home loan that this loan is taken if a person is planning to renovate the house or expand. Usually, banks fund up to 70 to 85 percent of the estimated value of the renovation or extension work. Bank considers age, creditworthiness, credit history, and repayment capacity to sanction the loan.
- Home Conversion Loans
This type of home loan is availed if you already have a house for which you took a home loan but now you want to move to the other house. In this case, if you avail for home conversion loan then your current home loan will be transferred to the new house including the extra amount required. You will not have to pay the previous loan but this type of loan comes at a very higher price which also involves conversion fees.
- Land Purchase Loans
If you want to purchase land either to construct a house or for the other investment purpose then this loan is for you. The maximum loan tenure is for 15 years so the EMI is also high in this case and the maximum Loan To Value (LTV) is 70 percent of the plot value.
- Stamp Duty Loans
This is not a very popular type of loan but it is availed if you want the loan to pay the stamp duty charges in case you want to transfer your property to another person, the property must have been purchased by you.
- Bridge Loans
You can avail this loan if you want to sell the existing home and purchase a new one. This loan is customised to bridge a financial gap which is created when you are buying a new house and also looking for a buyer for your old house. Typically, the tenure for this type of loan is for less than two years, if a person is not able to find a buyer for the old house within the tenure than lender can convert it into a mortgage loan with a higher rate of interest.
- Balance-Transfer Loans
If you want to transfer you availed loan from one bank to another then this loan is taken. This facility comes at the price of a higher rate of interest (ROI). Generally, this is done if a borrower is unhappy with the bank services or they are getting a lower home loan interest rate in some other bank to repay the loan amount.
- NRI Home Loans
The NRI home loan is especially customised for the Non-Resident Indians (NRI) who wants to invest in India by buying properties for residential purpose and not buying agricultural land. The process to avail this loans different from other types of home loan.
