Real estate is one of the few investment avenues that has offered profitable growth to investors. With this, home buyers’ property prices have increased dramatically. These days, Home Loans have become necessary for purchasing a house. Several banks and NBFCs offer home loans to home buyers at reasonable mortgage loan interest rates.
Home buyers can find the interest rates, loan processing charges, and best home loans terms online and apply for the most suitable option. Only a few people know that there are various categories of Home Loans. Here are the details about the different Home Loans available in India.
Types Of Home Loans in India
- Loan for house purchase: It is the most straightforward and commonly availed Home Loan. Most leading banks offer a Home Loan for the purchase of a home. The house itself acts as collateral for this secured loan, and you can get up to 75-85%% of the property’s value as a loan.
- Loan for purchase of land: People who only want to buy land presently can opt for a Home Loan for the purchase of land. It allows the borrower to keep the land as an investment, they can construct a house whenever funds are available. These loans have a shorter tenure of five to 15 years. Their interest rates are usually the same as a regular Housing Loan, and the loan seeker has to pay 30-35% of the land’s value as a down payment. However, customers cannot buy agricultural land with this loan.
- Loan for home improvement: The house you live in represents your class and taste. If you want to renovate or restyle your dream abode but lack the funds for it, you can get a home improvement loan. This loan facilitates a house’s renovation, extension, and repair work. Lenders usually provide 80-90% of the property value as a home improvement loan.
- Loan for construction of a house: This type of loan is provided to assist in constructing a new house. The interest rate applicable for this type of Home Loan is similar to the regular Home Loans.
- Loan for home conversion: If a customer has already taken a Home Loan from a bank to buy a house, they can take a home conversion loan to buy additional residential property. The outstanding amount of the borrower’s first Housing Loan gets transferred to the second loan. Loan seekers can pre-pay their first loan when taking a second loan. The interest rate on this loan may be higher than a new Housing Loan because home buyers get this loan against their second housing property.
- Bridge loans: An individual who wants to sell his existing home and buy a new house can get a bridge loan. As can be understood from the name, a bridge loan helps the customer bridge the gap created when the person buys a new home and looks for a customer to sell off his existing home. The customer must provide the details of the property he wants to buy to get this loan. If he fails to find a customer for his old home within six to 12 months for the old house, the lender has the option of converting the bridge loan into a routine Home Loan, which will have a higher interest rate.
- Balance transfer Home Loan: According to the directives of the Reserve Bank of India, banks should pass on the benefit of lower interest rates to existing customers. However, only a few banks do so. Such customers can enjoy the benefits of lower interest rates prevailing in the market by using a balance transfer Home Loan. Under this Housing Loan, the customer can transfer the balance of their existing Home Loan to another Housing Loan that comes at lower interest charges.
Also Read: How to choose the best home loan in India?
- Reverse mortgage loan: Senior citizens can avail of a reverse mortgage loan by pledging their property with the bank. The bank assesses the property’s market value and disburses the loan as regular payments to the borrower. The customer’s equity in the house diminishes with every periodic payment.
Apart from these Housing Loans, an individual can also avail of a stamp duty loan which they can use to pay the stamp duty during the registry of the house.
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