Know All About Different Types Of Home Loans

Settling down has become associated with owning a home in India. In this busy world, everyone wishes to return to their dream home and unwind at the end of the day. However, the recent rise in real estate prices has made it difficult to buy a home. 

Using up all your savings to buy land or a house is not the best idea. A mortgage is an easy way to finance your home purchase which is why the demand for mortgages has grown exponentially in recent years. 

Banks and other lending institutions now offer different home loans for different situations. Many banks have started introducing various home savings programs to meet the requirements of all social classes. Some banks also offer mortgages specifically designed for women, farmers, and loans for land purchases, to name a few. 

Some of the most popular mortgage types are detailed below to help you choose the one best for you.

TYPES OF HOME LOANS

Loan for land purchase

Some banks offer loans for the purchase of land. Buying land is a flexible option. Buyers can save money and build a home whenever finances allow. You can also own the land as an investment. Lenders such as nationalised banks rent up to 85% of real estate costs. 

Home purchase loan 

The most common home loan is a new or pre-owned home purchase loan. The loan is also widespread and offered by many banks in different variations. Interest rates can be either floating or fixed and typically range from 9.85% to 11.25%.

A home extension or extension loan 

If you need another balcony or an extra bedroom or want to expand your current home, you can opt for a home extension loan. Some banks also offer loans for home improvements, such as renovations or building new rooms.

Home conversion loan 

Anyone who has already bought a home but wants to move to a new home can opt for a home conversion loan. They can finance the purchase of a new home without having to repay the previous mortgage. The part of the mortgage is convenient but make sure to check and compare the interest rates.

Renovation loan 

Renovation and repair jobs such as exterior and interior repairs, painting, building flood tanks, and electrical renovations will make your home look great. However, banks and other non-banking financial institutions offer specialised home renovation loans if you are short on funds for repairs and renovations.

Mortgage balance transfer 

The option is available when individuals want to transfer their mortgage from one bank to another. For example, when other banks offer low-interest rates or better services. It is done to pay the remaining loan at the revised lower interest rate offered by other lenders. 

NRI Housing Loan 

The procedure and application process for this type of loan is specifically designed to help non-resident Indians to purchase residential properties anywhere in India. Most private and public banks offer NRI loans to a person with a minimum of 2 years of work experience abroad. However, the eligibility criteria for years of work experience can vary from one lender to another. 

Bridging loan 

A bridge loan is a short-term loan used by existing homeowners who are planning to purchase new property. It funds the borrower to buy a new home until a buyer is found for the existing property. The type of loan usually requires a new home mortgage at the bank and is extended for less than two years. 

Home Loans for Women

Nowadays, RBI-recognized banks and other lending institutions offer special home loans for women. These loans offer concessional interest rates and other benefits such as longer repayment tenors to help empower women.  

Takeaways

Thanks to the many home loan options available today, getting a mortgage has never been easier. Mortgages can be used for various purposes other than just buying a home. Understanding the types of home loans will help you decide the type of loan best fit for your particular situation. 

To inquire about mortgage options, go directly go to your bank or apply online. Once you use it, your bank will collect the required documents, check the credit score, determine property values, and calculate eligibility based on income and obligations. After analysing and verifying all the documents, the bank will decide whether to accept or reject the loan.