Types of home loans
In India, a home matters a lot. The home is an identity of how successful a person is. Any person’s accomplishments are being judged by the home. The absence of a home of one’s own bothers a lot, even to the people, who haven’t offered a lending hand to the person, ever in life. Even, a person dreams of having an own home, from the first day, he/she start earning of own. In actual, in India, the settling down and well-settled terms are synonyms of having an own home.
Having an own home offers several benefits, and to avail those benefits, a person always look forward to buying a home. Buying a home, offers unlimited freedom, a sense of security and a private space and complete liberty to the family, which makes a person and his person to enjoy life, in a way they like. While, there are several benefits, which comes attached with buying an own home, the task of purchasing an own home has become a herculean task. Gone are the days, when a person could have easily afforded to buy a plot and get a home constructed. Now, buying a plot have gone much beyond the hands of the people, and even the flats, which are up for the grasp, are so costly, that it would take long years before collecting enough money to meet the goal.
For covering those additional requirements of funds, which a person cannot manage on own towards the purchase of a home, the home loans by different banks serve to meet, very effectively. In India, there are almost every banks, that provide home loans to meet the purpose of the people towards buying an own home. To complement the lack of funds, the banks offer home loans to the people at the lowest rate of interest and thus helping them achieve the dream of owning an own home.
Types of Home Loans
The demand for the home loans has been on the rise since the push towards the own home has seen an unprecedented pace over the years. The banks and other financial institutions have been highly active in this segment and with several attractive offers and schemes, the banks and other lending agencies have pushed the home loans towards a greater height. Also, the banks and other lending agencies have come up with different types of home loans to help people accomplish their various needs for the housing. In order to cater to the needs of the various sections of the society and to help them in meeting those necessities, the banks and other agencies have introduced several home loan schemes and now they feature various types of home loans in the segment.
Let’s take a close look at those home loan types:
Loans for Purchase of Land
Loans for purchase of land are given to the people, who are looking towards the purchase of a plot to build a home. This sort of loans is applicable for the people who are just looking to purchase a piece of plot to build a home, and there are certain conditions and restriction on such loans. Also, the banks and the lending agencies offer the loans up to 80% to 85% of the total price of the plot.
Loans for Home Purchase
Loans for home purchase are readily available for the people who are looking to purchase a home or a flat for their living. In case, of a shortage of funds, the people can approach the banks for the home purchase loans, under which the people are sanctioned up to 80% to 85% of the total price of the residential home value. It is the most popular loan type and there’s no bank, which deals in home loans of various and doesn’t deal in loans of the home purchase. Under this loan type, a person is free to choose either the fixed rate of interest or the floating rate of interest (with each having their own benefits and limitations).
Loans for Construction of a House
For the ones, who already have their own plot, and are not quite capable to accomplish the task of constructing a home with the funds, they have, can opt for the loan for the construction of a house. This type of home loan is available only if the person has the plot of own, and there are several terms and conditions laid down under this loan type.
The loan approval for this type of the loan is quite different and there are certain conditions laid down. For example, in order to include the cost of the purchase of the plot, the plot must be purchased within a year of applying for the home construction cost. The total loan amount sanctioned under the construction loan is decided on a rough estimate of the construction cost. Even the loan amount may be disbursed all at once or may be paid in installments.
Loans for House Expansion or Extension
For the people who are looking towards the expansion of their home and are in need of the additional funds can opt for the home extension or home expansion loans. The home expansion includes the alteration in the current structure of the residence to add extra space in the form of constructing a new room, or a new a floor, gong for the bigger bathroom or enclosing a balcony or any such. Here are several banks that offer loans for this sort of expansion work, while there are some banks that cover this need under the home improvement loans.
Home Conversion Loan
Home conversion loans are useful for those people, who are looking to move to a new house and are already having a home loan on their name. By the process of the transfer of the current ongoing home loan to the new house, the borrowers can fund the buying of the new home with the home conversion loan. The home conversion loan allows the people to fund the purchase of the new home and at the same time also need not repay the previous home loan. However, with this conversion, there comes a negative side in the form of the interest rate. Opting for the home conversion loan can be a little expensive as compared to the traditional home loan meant.
Loans for Home Improvement
Just as the home extension loan works, the same goes for the home improvement loans, The home improvement loans are just like home extension loans, where the people look towards the banks for the renovation of the home, which may include the tasks like Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation. Thus, if a person lacks the finances for covering the cost for the repair and renovation works, there are several banks and other NBFCs that offer the home improvement loans,
NRI Home Loans
NRI Home loans are the loan types, especially designed to support the non-resident Indians for buying a residential property in the Country. Under the NRI Loan types, the Nonresident Indians are offered several benefits, which are quite different from other home loans. Under this loan types, they are offered with the helping hands concerning the formalities and application procedure. With the extended support to the non-resident Indians, they are offered with added help, thus helping them in buying the property in India. Not all banks offer this loan types, and there are some banks that offer the NRI Loans as a product of their housing loan portfolio.
Bridged loans are the loan types, which comes under the hood of the home loans. These are the loan types, which are short-term loan types and are designed for the people, who are existing homeowners and are in fact planning to buy a new property. Under the bridge the home loans, the buyers are offered the help to buy a new home and thus aid the borrowers with the funds to the purchase of new house until the time, a buyer is identified for the existing property. This type of loan generally requires the mortgage of a new house with the bank. This loan type is extended for less than two years. There are only a few banks, that offer this kind of loans, and the prime names among those few banks are HDFC Bank and Vijaya Bank.
Balance Transfer Home Loans
For the people who are already carrying the home loan under their name, but wishes to switch from that particular bank to another bank, owing to various reasons, can opt for the Balance Transfer Home Loans. Under this loan type, the applicant will apply for the balance transfer home loans and the new bank, after checking all the details and eligibility of the applicant will pay the remaining dues to the previous bank, and thus the home loan gets transferred to the new bank. There may be several reasons for someone to switch for the new bank and opt for the Balance Transfer Home Loans, which may include unsatisfactory services of the existing bank and higher interest rate of the existing bank towards the home loan. By the process of the Balance Transfer Home Loans, the person can ensure the better customer services with the new bank and can also ensure that the remaining home loan is charged at a far better interest rate than the previous one, thus in the process getting successful in saving a good final amount to be paid on home loan.
Stamp Duty Home Loan
Not a popular home loan type, but just for your information, there are few people who look toward the home loans to cover the stamp duty charges, during the purchase of the property. While the simple house purchase doesn’t involve paying a very high stamp duty charges, the deals of the property, which calls for the payment of crores, may attract heavy stamp duty charges, and thus the need for such a loan type is more to cover the additional burden of purchasing stamp duty.
There are various home loans types, available in our country to cover the various requirements of the people when it comes to the home. With the advent of the better technology and more exposure of the people with the internet, the task for the application of the home loans becomes easier. The home loan allows the people to relish their dream of having a home of their own. With the home loan at an affordable rate of interest, the people are highly motivated to take a step further and have a home of own. The home loan ensures that the people are not left on their own to manage the entire funds for the home purchase, and thus in the process offer a helping hand.
With the easy, short and quick application process for the home loans, the home loan applicant is ensured that the banks and other lending agencies are always ready to serve them in the best possible way. Also, with more innovation in bringing more innovative products in this segment, the people are ensured that whatever, the requirements are concerning a home, the buyers will not be left alone on their own and will be offered the best support with the availability of funds, even if is for home renovation or any such task.
Buying a home is a major investment, which may require you a helping hand. Buying a home is a long-term planning and one must plan it very well. Do it smartly and plan your budget in a more responsible manner. For any added requirement of funds, the home loan availability is there, which can help you in bridging the gap, between the actual home price and funds available with you.
However, while in the entire process, ensure that you aren’t overburdened with the EMIs, which you are going to incur with the home loan!
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