You Can Avail 8 Different Types Of Home Loans In India

With the growing demand for housing units, the overall price of real estate is also increasing. Purchasing a home is a primary wish that every individual works hard to fulfil. To realise this wish, various financial institutions offer home loans in India at competitive interest rates. Obtaining home loans also benefit individuals with substantial tax benefits and ensures capital appreciation. In India, home loans are further categorised into different types based on the requirements of a borrower.

Types of home loans in India

Individuals can obtain housing loans for renovation/extension of the section of the house or even for buying a second house. Here are the eight most common types of home loans available in India:

1. General Home Loan

This is the most standard type of home loan in India, availed by individuals for purchasing a new house. Different housing financing companies offer loan amounts that cover up to 90% of the market value of a property.

To extend this financial product, lenders have laid down home loan eligibility criteria like a minimum income slab, CIBIL score, work experience of salaried borrowers, etc. However, the parameters of the eligibility criteria for the application of a home loan differ from lender to lender.

Also, some reputed financiers also extend pre-approved offers to their existing customers. Such offers ensure simplification of loan processing, which saves time. These offers are available on financial products like loan against property, home loans, etc. To check the pre-approved offers, borrowers can enter their necessary contact details such as name and contact number.

2. Loans for home construction

Individuals can specifically avail financing to construct their houses. Like a normal home loan, the eligibility parameters here also differs from one lender to another. Also, financial institutions approve the loan amount based on the approximate cost of construction of the house.

3. Loan for land purchase

Borrowers can opt for this type of loan for purchasing a piece of land for the construction of their home. The tenor of loan obtained for land purchase generally ranges between 5 to 15 years. However, this factor depends on policies followed by different housing finance companies. Also, loans taken to buy land for agricultural purposes do not fall under this type.

4. Loan for home improvement/extensions

Different financial institutions offer loans for the purpose of home improvement, extensions or renovation. This type of loan usually covers 70-80% of the estimated cost of improvement/extension.

Loans available for extending a section in the house or for repairs and renovations fall under this category. Additionally, individuals with an existing property can also mortgage it to get a fulfil this purpose.

5. Loans for home conversion

A home conversion loan is usually availed by an existing home loan borrower who requires an additional loan to purchase another home. In this scenario, the balance amount of the previous loan is mostly adjusted with the new borrowings. This type of home loan in India is obtained to cut down the pre-pay of the existing loan amount.

The interest rates are usually higher for home conversion loans, which varies across different financial institutions. So, it is beneficial for the borrowers to check the probable EMI amount on the housing loan EMI calculator.

6. Bridge loans

Individuals might want to sell their existing housing properties and purchase a new one. It is at this time bridge loans are opted to balance out the financial gap between the sale amount of existing property and the purchase amount of the new home. This is a short term loan, and the requirement of the same can be different from other home loan eligibility criteria.

7. Reverse mortgage loans

This loan approach is new in India and is specifically introduced to provide monetary aid to senior citizens. Reverse mortgage loans ensure senior homeowners borrow funds against the market value of their homes. The loan amount allowed by the lender is either in the form of a fixed monthly payment or a lump sum payable fully.

8. Balance transfer home loans

Last but not least, a home loan balance transfer is another variant of this credit instrument. The balance transfer is a lucrative option for borrowers as it reduces the liability of paying heavy EMI from their existing home loans. Some financial lending companies ensure hassle-free processing with minimum documentation and speedy disbursal for borrowers. Nonetheless, this cannot be regarded as a home loan as such, it is more like an additional facility.

Reputed financial companies ensure a seamless application process of home loans in India with minimum documentation. Also, with higher loan quantum and relaxation on credit score, obtaining housing loans have become more effortless for any borrower.