Buying a home is a big step for the majority of the Indian population, and home loans are the primary source of financing such significant purchases. Over the last couple of decades, the demand for homes, and subsequently for home loans have seen a manifold increase in the country.
And with the increase in demand for home loans, many different home loans have sprung up, which cater to the varying needs of the populace. So, if you’re looking to buy a new home, but are bewildered about which home loan to go for, here’s a list of types of home loans to choose from, and their use cases.
- Housing loans
Housing loan is the most common but popular type of home loan opted for while purchasing a home. Many reputed housing finance companies and banks provide housing loan with competitive interest rates and flexible tenures. Most of the housing loans finance up to 80-85% of the market value of the house as the final loan amount.
- Home construction loans
Many financial institutions offer home loans to borrowers who wish to construct a house on a piece of land owned by them. These home construction loans differ from the traditional housing loans in some aspects, mainly in the approval and application process. Home construction loans require:
- The land or plot to be under the borrower’s ownership for more than a year before construction
- A rough estimate of the total construction cost of the house
- Home improvement loans
Home improvement loans are perfect for individuals who’re looking to revamp their home aesthetically or ergonomically. Also known as home renovation loans, home improvement loans are generally utilized to upgrade the electrical system, painting the walls, waterproofing the house, or plumbing.
- Home extension loans
If you’re looking to add a room or two in the house or to expand your house by adding an entirely new storey, then a home extension loan might be the appropriate candidate to finance such a venture. Many banks include such loans under home improvement loans.
- NRI- home loans
If you’re an Indian settled in a foreign land and are looking to buy a piece of residential property in India, then NRI home loan is what you’re looking for. NRI home loans are similar to traditional housing loans, although the paperwork and documentation required are a bit more.
- Land purchase loan
Many banks and NBFCs provide land or plot purchase loans to loan applicants who are looking to buy a piece of land to build their house on. Like housing loans, lenders finance up to 80-85% of the market price of the land or plot.
- Home loan balance transfer
Sometimes, the home loan interest rates that your bank charges might feel a bit overwhelming. In such cases, it is possible to transfer your outstanding loan amount to a different lending bank, which preferably charges a lower rate of interest.
- Composite loans
If you’re looking to finance your plot purchase and home construction in one go, composite loans might be the perfect product for you.
Besides the types of home loans mentioned above, there are many other niche home loans you can opt for. Apply for a home loan which caters to your needs and make your home-ownership dream come true!