9 Types of Home Loans you Can Avail in India to Buy Your Dream House

 

With more companies switching to the hybrid working model, the CAGR of home loans have increased at a pace of 12% to 13% in tier 3 and tier 4 districts during FY22 and FY19. This calls for the attention of willing aspirants to make the most out of this potential growth.

In this regard, prospective borrowers should know the types of house loan they can opt for to own their dream residential property.

What are the types of home loans in India?

Lending institutions in our country offer a wide range of home loan options to customers. Whether an applicant is looking to purchase a new home or renovate his/her existing home, financial institutions offer customised home loan plans to meet diverse requirements.

Here are the 9 types of house loan options offered by lenders:

1. Home purchase loan

Candidates can opt for a home purchase loan if they are planning to buy a new home. However, willing applicants must meet the home loan eligibility criteria and documents required before applying for this credit facility. This will ensure a smooth and fast home loan process and help you obtain the required funds within a minimum turnaround time. Several reputed financial institutions offer a loan amount of up to Rs.5 crore to fund home purchase-related expenses. One should make sure to calculate the eligibility criteria for a home loan to enjoy a hassle-free borrowing experience.

2. Home construction loan

Individuals with owned or co-owned land can opt for this type of house loan to construct their dream home. However, for such loans, the maximum loan amount depends on the approximate cost of constructing the property.

3. Renovation or home improvement loan

One can apply for a home loan to renovate an existing property. The financial institution will fund the expenses for any form of renovation or refurbishment. For example, one can opt for a home improvement loan to re-paint walls, extend the house, do electrical work, etc.

4. Joint home loan

Many want to buy their own property but are unable to meet all the eligibility parameters and terms asked by a lender. In such a case, they can opt for a joint home loan with a co-applicant. Adding the income of both applicants allows them to obtain a higher home loan amount.

5. NRI home loans

Non-resident Indians planning to purchase a home in India can opt for an NRI home loan. For such types, the application and documentation process is different from the other home loan types. However, the overall structure of the home loan remains similar.

6. Balance transfer home loan

One can opt for transferring the outstanding home loan amount to a new lender of their choice. Usually, one opts for this credit option when he/she finds a new lender offering a lower home loan interest rate and better terms.

7. Home expansion loan

One can opt for this type of home loan if he/she wants to expand an existing property by adding more rooms, balcony, etc. However, candidates must keep in mind that they will have to take permission from their municipality in order to expand their home.

8. Bridge loan

A bridge loan is a type of short-term credit option that allows house owners to purchase a new residential property by selling off an existing property. Generally, a bridge loan comes with a higher rate of interest and has a repayment tenor of fewer than two years.

9. Land purchase loans

Financial institutions in India offer land purchase loans to customers looking forward to purchasing land to build their property on. One can get as high as 80 to 85% of the current market value of the land as a loan. However, an applicant has to repay the rest 15 to 20% as a down payment.

Irrespective of the type of house loan one opts for, he/she can use a home loan EMI calculator to determine their monthly instalments even before applying for the credit facility. Further, one of the benefits of calculating EMIs before taking a home loan is that it allows you to compare the different borrowing options in the market.

Several leading financial institutions in India extend pre-approved offers on secured credit facilities, such as mortgage loans, home loans, etc. Eligible candidates can check their pre-approved offers by entering their names and contact details on the lender’s website.

Hence, one can opt for any of the following types of house loans, as mentioned above. Further, after borrowing, candidates should make sure to repay their monthly instalments in a disciplined manner. This will keep them free from financial burdens while helping them maintain a decent credit score.