What are the types of Home Loan in India you Must know

Posted by Bhavna Singhal on November 28th, 2018

Over the years there has been a rise in the population of India. With the rise in population, the demand for goods and services has also gone up. As a result of this, there has been an increase in demand for owned houses. Purchasing your own dream house requires an adequate amount of funds. You may or may not have the required amount of savings. Also, it is not advisable to invest all your savings in the home only, as you should keep some cash in hand to meet any unforeseen contingencies. If you are planning to buy your home now or in near future then you can take a home loan for fulfilling your dream of buying a home. There are different types of home loan available depending upon your requirement. Let's discuss the different types of home loan available:

Home Loan

Most commonly taken loan is the home loan for the purchase of a new house or plot. Home loan is taken for the construction of a house on the existing plot. There are many banks and NBFCs providing home loans at affordable rates to fulfill the dream of buying your own house.

Home Improvement Loan

Home improvement loan is taken for the renovation of your existing home. Time to time the houses you are putting up in requires renovation. Also, you may want to change the interiors, wall paints, flooring etc. to keep up with the latest trend or to add a fresh look to your house.

Home Extension Loan

This loan is taken when you decide to extend a portion of your house like a new room, or a balcony etc. You can easily avail a home extension loan from any of the bank or NBFCs providing loan for this purpose.

Land Purchase Loan

If you wish to buy a plot or you already have a plot and you want to start construction on it, then you would require a lot of funds for the construction, interiors, paints, flooring etc. You can take a land purchase loan for the same. Land purchase loan carries an interest rate which is 1.5-2% higher than the home loan.

Home Loan Overdraft

Home loan overdraft allows you to deposit surplus funds available in an overdraft account any number of times during the loan tenure without any penalty charges. Overdraft loan helps you in saving on the cost in the form of reduced interest payments.

Home Loan Top-Up

Top-up loan simply means borrowing additional loan amount on the existing loan either from the already existing lender or from the new lender at the time of balance transfer. If you require additional funds any time during the loan tenure, you can take a home loan top-up. The cost of borrowing i.e. interest rate will be 0.25-1% more than the regular loan.

Home Loan Balance Transfer

If you already have a home loan running and you are not satisfied with the services of the existing lender or some other bank is offering you a loan at a lower interest rate, then you can balance transfer your loan. A balance transfer is usually done to save on interest payments or to avail a top-up loan.

Keeping in mind the various home loan options available you can apply for any type of home loan depending upon your requirement. Different home loans carry a different rate of interest, processing fee etc. You can check the interest rate and other home loan offers online through an aggregator or by visiting the bank's website.