Exploring Home Loan Options: Find the Perfect Fit for Your Needs!
Settling down has become a synonym for owning a home. Everybody dreams of owning an ideal abode. Like everyone, you, too, dream of owning a perfect abode where you can find peace and comfort in this busy world. Home loans are the perfect solution to fund your house purchase. But, you should refrain from spending your entire savings to purchase a land or home. Banks, NBFCs, and other financing establishments offer different loan types. Before you apply for home loan, checking the home loan interest rate is advisable. The demand for home loans has increased in recent years, and people expect differently from a home loan.
Financial institutions and banks have developed the concept of different home loan schemes to cater to the varied requirements of different people. Multiple banks offer specially curated home loans for women and agriculturists and loans exclusively for purchasing land. The article covers the types of home loans available in India. Let’s explore them!
Types of Home Loans Available in India
In addition to providing a home loan for purchasing your dream abode, lenders also provide home loans for other purposes, like separate loans for house construction, purchasing a plot of land, home renovation, saving interest, home extension, transferring balance topping up the existing home loan, etc. Separate home loans are available for NRIs. If you want to buy a new home with the sale proceeds of a new house, you can apply for a bridge loan. So, the loan market in India has different types of home loans.
No matter which type of home loan you apply for, the home loan interest rate is important. Some of the different types of home loans available in the market are as follows:-
Loan for Purchasing a New Home
A loan for purchasing a new home is a loan you can opt for if you want to purchase a new residential property. Many loan providers offer 70% to 90% financing of the cost of the actual property. The home loan interest rate begins from 8% per annum but can range based on your credit profile. The repayment term usually extends to approximately thirty years. You use a home loan calculator to compute the monthly EMIs before you apply for home loan.
Loan for Home Renovation
People who own a home but whose situation prevents them from renovating and upgrading their home can apply for a home renovation loan. Home improvement or renovation can include repairing an existing residential property, repainting inner and outer walls, installing new light fixtures, extending the house, etc. The repayment tenure of such loans is shorter. Nevertheless, the home loan interest rate is similar to regular loans.
Loans for Building Homes
Loans for building homes or a home construction loan are available if you wish to construct your residential property on an owned or co-owned plot of land. In the case of such loans, the loan amount that lenders approve is based on a rough estimate of the construction cost. Like a composite loan, the disbursal is based on the stages of construction. If you own a piece of land and need financing to build your dream house on that plot, you can apply for home loan specifically meant for home construction.
Home Extension Loan
A home loan for extension is convenient for people who wish to expand their home in any form structurally. You can apply for home loan to structurally expand your home from banks, NBFCs, and other financial institutions. You can get a home extension loan with the same lender as an add-on to your current loan. These loans are cheaper and have low processing fees. They are easily obtainable and can fetch tax benefits.
Top-up and Balance Transfer Home Loan
The balance transfer on a home loan is a facility that allows you to shift your current loan to a new loan account at a decreased home loan interest rate. You can apply for home loan if you’re unhappy with the services and fees of your current lender. In contrast, a top-up on your home loan means topping up your existing home loan with additional funds. For example, if you have an ongoing home loan but need more funds, you can apply for a top-up on your current loan. The best part is that it doesn’t have end-use restrictions, and you can use the amount to meet any financial need. The top-up home loan is like a personal loan.
Conclusion
It is vital for prospective borrowers to research the multiple kinds of home loans available in India. It will help you, as a prospective borrower, to choose an option best suited to your financial needs. Nevertheless, before you apply for home loan, you must compare the home loan interest rate and check the EMIs offered by different loan providers on various types of home loans before finalising one. Now that you know the various kinds of home loans available in the Indian loan market, you can select the right one for yourself. You can look at the home loan offers from leading banks and financial insitutions to apply for any of the home loans specified above.
