What are the types of home loans available?
There are various Home Loan options offered by national or private banks and non-banking financial companies in India. You need to understand each of the options available to know which one is best for you based upon your need:
The various types of property loans that are generally available are:
Land-purchase loans are given by banks or non-banking financial companies (NBFCs) to buy a plot or land on which the loan applicant is looking to construct a house. Generally banks lend up to 80–85% of the price of the plot or land.
2) Home-purchase loan
A home-purchase loan amount is utilized to buy a residential property. Financial institutions usually provide up to 80–85% of the market value of the house as loan amount. The interest rate on these loans is either fixed, floating or hybrid.
3) Home-construction loan
financial institutions issue Home Loans to applicants who want to construct a house on a plot owned or co-owned by them. The loan application and approval process for home-construction loans are different in certain aspects than from the commonly available housing loans. This includes:
* The plot or land should have been bought within a year
* The borrower has to make a rough estimate of the cost that will be incurred for the construction of the house
* If the cost of plot is not included in the loan amount, only the estimation for construction of house is taken into consideration
4) Home-extension loans
This loan is taken by individuals who want to expand or extend their existing house. Few banks differentiate this loan based on the purpose of expansion of the current house. Most banks include this type of loan as part of their home-improvement loans.
5) Home-improvement loans
Home-improvement loans are taken by individuals who own a house, but lack funds to renovate it. Renovation includes — repairs to existing house, painting of the walls, digging a bore well, water-proofing, electrical wiring etc.
6) NRI-home loans
NRI-home loans are specialized home loans that assist non-resident Indians who are interested in buying residential property in India. Though the structure of this home loan variant is similar to the regular home loans, the paperwork is a bit more exhaustive.
7) Home-conversion loans
Existing home-loan borrowers who wish to move into another property can avail a home conversion loan to buy a new house.
