Home loans can frequently seem overwhelming to those considering it for the first time, from the extensive financial preparation required to the drawn-out procedure for getting accepted for one. Everybody wants to buy the greatest house they can. But, with property prices that are sky high and soaring, turning the dream into a reality could be a step too far. Here, the good old home loan can come to the rescue.
A house loan is an amount of money, a person loans from a bank or other financial organization to buy residential or commercial property. After that, the borrower must pay the lender the loan balance in Easy Monthly Instalments (EMI)s at a predetermined home loan interest rate.
Benefits of Home Loans
- With house loans, it’s simpler than ever to purchase your own home.
- Your home credits can be repaid over flexible terms of up to 30 years.
- Tax advantages are available for house loans under Sections 80C and 24B.
- The loan can purchase brand-new, previously owned, and under-construction real estate.
Types of Home Loans
Property loans are available from lenders for several different reasons in addition to purchasing a home.
Here are some of the most common house loan types that are offered on the financial market.
1. Loans for the Purchase of Land
Several banks offer loans for land purchases.
Purchasing land is a flexible option, the buyer can save funds and construct a house whenever his finances allow or just have the land as an investment.
Up to 85% of the cost of the land is given as loans by lenders like Axis Bank.
2. Construction of a House Loans
This financing is ideal for people looking to build a home rather than buy one already built. This loan has a unique approval process because it also considers plot costs.
In order for a home construction loan to be approved, the plot must be purchased within a year. The loan amount is chosen in order to cover construction costs.
A few of the banking programs that offer whole payments include Canara Bank, UCO Bank, and Bank of Baroda.
3. Loans for Home Purchase
The loan for the purchase of a new or used home is the most common sort of mortgage.
This loan is likewise widely accessible and is provided in various forms by numerous banks.
The interest rate is often between 9.85% and 11.25% and can be either floating or fixed. A lot of banks also offer loans for 85% of the total sum.
4. House Expansion or Extension Loans
Want another balcony or an additional bedroom? No worries, some banks also offer loans for house expansion including alteration of the current structure and construction of new rooms.
HDFC Home Extension loans and house renovation loans offered by the Bank of Baroda are popular in this category.
5. Home Conversion Loans
Home conversion loans are an option for people who have previously taken out a mortgage and used it to buy a home but wish to relocate.
Borrowers can finance the purchase of a new home and avoid repaying their existing mortgage by transferring their current debt to the new property.
Despite the simplicity, this type of home loan is also quite pricey.
6. Loans for Home Improvement
Your home will appear better after restoration and repair projects like painting, overhead water tank building, exterior, and interior repairs, and electrical upgrades.
However, banks like Union Bank of India and Vijaya Bank offer special home improvement loans if you don’t have the money for repairs and renovations.
7. Balance Transfer Home Loans
When a person wants to transfer their home loan from one bank to another bank due to factors like lower interest rates or better services provided by the other bank, they can use this option.
This is done so that the remaining loan can be repaid at the new, reduced interest rates the different lender is offering.
8. NRI Home Loans
Unlike other types of loans, this type is specifically designed for non-resident Indians to enable them to buy a residential property in India.
The majority of commercial and public sector banks offer home credit to NRIs.
9. Bridged Loans
A bridge loan is a short-term loan available to homeowners who plan to buy a new house. It helps borrowers finance the purchase of a new home while looking for a buyer for the old one.
This form of loan often lasts no longer than two years and requires the bank to hold a mortgage on a primary residence. Vijaya Bank and HDFC Bank offer bridge loans.
10. Stamp Duty Loans
Stamp duty loans, a lesser-known subset of home loans, are provided to pay the stamp duty fees incurred on the purchase of the real estate.
Ways to find a perfect home loan
- Determine your budget and financial goals for a home loan.
- Research and compare different lenders and their loan options.
- Consider factors such as interest rates, fees, repayment terms, and potential penalties.
- Take into account your credit score and financial history to determine what loan options may be available to you.
- Seek the advice of a financial advisor or mortgage broker to help you find the best loan for your situation.
- Carefully read and understand the terms and conditions of any loan before signing any agreements.
- Negotiate with the lender to get the best terms and conditions for your home loan.
- Regularly review your loan to ensure it is still meeting your needs and financial goals.
Since home loans are becoming a more prevalent way to finance the purchase of a home, it is important to assess your requirements and request the proper kind of credit.
This will provide customers access to a loan with a reduced interest rate in addition to cutting down on paperwork and speeding up the loan approval process.
For your housing credits, use an EMI calculator to calculate your amortization plan so you may better manage your money.
