Different types of Home loans available in India?, Details About Different Types of Home Loans in India, Having an own house is every body’s dream. If you are living in a rental accommodation and suddenly got a home from your parents or grandparents as a gift then it gives you a different experience. Like that people who does not own a home can get benefited from home loans offered by various banks. The main purpose of home loan is to give financial assistance.
- To Purchase a land
- To purchase a house
- To construct a house
- To repair or renovate the house.
Types of Home loans available in India
There are a variety types of home loans in India which come with different features as discussed below:
- Land Purchase Loan
- Home Purchase Loan
- Home Construction Loan
- Home Improvement Loan
- Home Extension Loan
- Home Conversion Loan
- Bridged Loan
- Stamp Duty Loan
- Balance Transfer Loan
1. Land Purchase Loan:
This loan is sanctioned by banking & financial institutions to support the borrower in purchasing a land for constructing his dream home. Generally this loan carries a period of up to 15 years for repayment. This can be beneficial to those who have regular flow of income and who think that the cost of the loan less than what the land is going to fetch in the future.
2. Home Purchase Loan:
Home purchase loans give you the fiancé required for buying a new or existing home. Almost 80-85% of the total cost of the home can be obtained as loan. This is one of the mostly availed home loans in India. As salaried employees, people are increasingly trying to buy a new flat or house in well-developed area rather constructing a house on their own. This attitude drives the demand for these kind of loans.
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3. Home Construction Loan:
These loans are sanctioned for the purpose of constructing a house. This loan would be much complex in terms of procedural aspects when compared to the above two loans. If the land has been purchased by you before one year to the commencement of construction of the house then the cost of land would be considered to determine the cost of house, otherwise cost of land is excluded from the cost of the home. The documents required for this loan are slightly different from the above said loans.
4. Home Improvement Loan:
As the name suggests these loans are sanctioned by the banks and housing financial institution for taking up an improvement activity in the house, whether it is renovation, repairs, any electrical work, construction of small utilities which brings an improvement in the home. External works like structural repairs, waterproofing or internal works like tiling and flooring, plumbing, electrical work, painting are also included by the term improvement.
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5. Home Extension:
These loans are meant for giving financial assistance to take up an expansion of your home by way of building an additional room, balcony, expanding the living area etc., Generally this also requires permission form the municipality.
6. Home Conversion loan:
These are the loans sanctioned by banks and financial institution to those who have already obtained home loan from them to buy a home and now want to shift to another home which may need some further financial assistance. Through conversion existing loan is shifted to the new home.
Must Read – Complete Features of land loan
7. Bridged Loan:
As the name suggests these are the loans which are intended to help those who having a home want to buy or construct a new home buy selling off the existing home. If you want to sell your existing home but could not find a potential buyer but you wish to shift to a new home as early as possible, in such cases these loans are granted.
8. Stamp Duty Loan:
Stamp duty loans are designed to sanction the finance needed to pay off the stamp duty attached with the purchase of home or land. These are not as popular as the other loans.
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9. Balance Transfer Loan:
These are designed to pay off the existing loan and to switch over to another loan. For example if you have already had a home loan from a bank which charges 10% per annum as interest, after some time you came across a bank which gives you the loan @ 9% then using these types of loans you can pay off the existing loans.