Most individuals that are looking to buy a new house or property often turn to banks for a home loan. However, not many know that there are different types of home loan options available in India, and some of these conventional home loan types are accessible on the financial market as well.
Knowing about these different types of home loans is ideal before finalising the loan. Let’s take a quick look at the types of home loan you should be aware of while applying for a housing loan:
- Home Purchase loan
The most picked home loan is the home purchase loan, which helps the borrower buy a pre-owned or new home. The interest rate for this type of loan can be fixed or floating, and most banks are willing to lend anywhere between 80 to 90% of the property amount.
- Land Purchase loan
If a buyer wants to purchase land and build a home later, when resources allow, then a Land Purchase loan is ideal. Most banks offer to lend up to 85% of the total land cost.
- Home Extension loan
If you are looking to extend your current home, i.e., add a bedroom, balcony or create an in-house office space, then a Home Extension loan is ideal for you. There are many commercial banks that offer such kinds of home loans, which could include building additional rooms or altering the existing structure. However, it is advisable to look for a housing loan online and check inclusions of the home extension loan, which may vary from lender to lender.
- Home Construction loan
A Home Construction loan will help the homeowner build the home according to their specifications and needs instead of buying a prefabricated home. This type of home loan considers the plot cost and the loan amount, and the owner must have acquired the property within a year to be eligible for this loan.
- Home Conversion loan
If you have taken a home loan and bought a home already but wish to relocate to a different home now, then a Home Conversion loan is what you need. Borrowers can transfer their present home loan to the new home loan, and they won’t even have to close the old loan in such a scenario. However, home loans of this type can end up being a little pricey.
- Home Improvement loan
Be it repairing your home or renovating it; a Home Improvement loan can finance you for such requests at ease. It is advisable to consult a bank representative and understand what kind of repairing and remodelling is included in this loan type. Alternatively, you can also look up a housing loan online and check inclusions for a Home Improvement loan.
- Home loans for NRIs
If a Non-Resident Indian is looking to purchase a home in India, then they can look for a housing loan online and read all about home loans for NRIs. Most of the public sector and commercial banks offer NRI home loans.
- Home loan with Balance Transfer
This is one of the commonly used types of home loan wherein the borrower can transfer their home loan from one bank or financial institution to another. There are many reasons why homeowners try to transfer their balance home loan, including better service, lower interest rates, new schemes, etc.
- Stamp Duty loan
This is not a very common kind of house loan, but it can come in handy for the specific purpose of stamp duty expenditure. Stamp duty loans help offset the stamp duty charges that the home buyer incurs after buying the home.
- Bridge loan
Bridge loans are considered short-term conventional mortgage loans ideal for present homeowners looking for a new house. With the help of a bridge loan borrowers can easily finance their new house while looking for a buyer for their old house. However, banks hold a mortgage on the new home when offering a bridge loan.
It all boils down to which home loan you apply for when it comes to finding a home or property of your choice. Before you opt for a housing loan online, it is crucial to understand your loan requirement and then understand the different types of home loan available for your need. Choosing the right house loan type will help you step closer to your dream home.