The Buyt Desk
When you want to buy a new house of your dreams you may have to go for a home loan. Home loans are not debts when planned well. Let us understand more about it.
Indians have a notion that debts are a bad thing. But certainly, they are not as they help you grow and buy things you need and dream of. Home loans help you afford the home of your dreams. A mortgage is not a bad thing as it helps you grow. Along similar lines, an education loan helps a student learn and get into a high-paying job and be financially independent. Both student and home loans can be considered an investment as they help you be in a better position and charge a very low rate of interest.
All dream of buying a home from the day they start earning. It is the biggest dream in one’s lifetime as it needs a lot of money, effort, and time. It will be one of the biggest assets one will own. An individual needs to arrange money for a down payment and the rest can be from the home loan. A home loan is the easiest way to create money for buying a home at a very low rate of interest.
What are the various types of home loans in India?
For different purposes, there are different types of home loans in India. One may need a loan to buy a flat, individual home, or land, extend an existing house, or do renovation and repair work at home. Always know the reason for the home loan so that you can decide on the home loan you need. Below are various types of home loans available in India with their features and other important information about the loans.
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Home Purchase Loan – This is the most popular loan among home loans in India. As the name suggests, this can be used to buy the dream house. This loan is offered by housing finance companies, private banks, and public banks. This is an easy loan one can borrow when purchasing a house. Repayment of the loan can be done in instalments in the form of EMI. The loan amount granted is usually 80-90% of the house value. And the rate of interest for such mortgage loans can be fixed, floating, or hybrid.
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Home Construction Loan – This is one more kind of home loan that many Indians avail of as they like customized homes. This is specially designed for people who own land but need financial help to build their dream house. To avail of this loan, the borrower needs to meet certain conditions like the land where house construction will happen should be purchased within a year and should be ready with analysis and construction cost estimation.
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NRI Home Loans – This loan is designed for non-resident Indians who want to buy a home in India. This is very similar to a regular home loan but needs exhaustive paperwork as borrowers don’t stay in India.
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Home Improvement Loan – This loan is designed for individuals who want to renovate or repair their existing house. This loan finances for upgrading the electrical system, plumbing, waterproofing the ceiling, painting expenses for both interior and exterior of the house, etc.
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Home Extension Loan – This loan is designed for individuals who want to extend their existing house into a bigger one either by adding rooms on the same floor or adding a completely new floor to the existing building. If a borrower has already availed of a home loan, then a home extension loan can be requested or added to the existing loan from the same lender.
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Composite Home Loan – This loan is designed for individuals who want to buy land and also do construction on this land. This is a double financing loan that provides finance for both buying land for building a home and for the construction of a house on the same land.
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Home Loan Balance Transfer – This loan is designed for individuals who want to change their home loan lender. There are times when the borrower is not satisfied with the current loan lender and wishes to change the lender. Reasons could be anything like a high rate of interest or not satisfying services by the current lender. Under such needs, lenders can go for the home loan balance transfer loan which facilitates the borrower to transfer the loan balance (outstanding) amount from one lender to another.
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Home Conversion Loans – This loan is designed for individuals who want to shift from their current home to a new one. These aid people with adequate financing to buy a new house so that they can shift to a new house from their existing home.
Summing up
Home loans are a blessing for those who want to buy a new home but do not have enough funds. You should do good market research about the lenders and the facilities they offer before buying a home loan. Also, go for an appropriate home loan so that it is financially beneficial to you. Know your financial conditions well and plan based on numbers and not projections you make.
