Are you going to apply for a home loan to buy your dream home? It is not the only type of home loan that is available in India. Banks and non-banking finance companies (NBFCs) offer a wide array of home loans in India.
No matter if you are looking to buy a house, renovate your current home, lenders these days can help you with customized loan plans to suit your needs.
As a result, in this post, you will go through different types of home loans available in India. Read on!
Types of home loans in India at a glance
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Home purchase loan
It is the commonest type of home loan which is availed to buy a home. All leading banks and NBFCs extend this facility. As per the finance industry norms, a lender will finance up to 75-85% of the value of your home that you wish to buy. The remaining 20-25% needs to be arranged by the borrower known as the down payment.
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Home improvement loan
Lenders also extend the facility of home improvement loan which is availed to start repairs, renovation, decoration and related aspects of a home. The borrower is free to use the loan amount for internal and external improvement of the house. Lenders can award you up to 80-90% of your estimates as the loan.
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Home construction loan
The home construction loan is offered to those who are looking for money to construct a new home. The home loan interest rates and application procedure remain the same as that of any other types of home loan. A home construction loan is availed by people who want to have a home designed as per their preferences.
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Land purchase loan
Some people love to buy the land/plot for either constructing a new house later or just for the investment purpose. All leading lenders offer this facility. The loan repayment tenor may be up to 20 years. It also means that you will need to manage a relatively higher. However, you should know that buying agricultural land is not allowed to be purchased under this loan scheme.
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Loan against property
As the name suggests, this loan lets you pledge your existing home to get a higher amount of money. You can get a lower rate of interest and a longer tenor to pay a lower EMI. Most of the lenders let you borrow between 70-80% values of your current home as the loan amount. You can use the availed loan against the property amount to cover any of your needs as there are no restrictions.
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Balance transfer home loan
Are you still paying higher home loan interest rates even when you can see that other lenders in the market are offering a lower rate? Will you continue to pay a higher EMI due to higher loan rates? No! You can simply opt for the balance transfer home loan. You can use the facility to switch your loan account from your current lender to another one offering a lower rate. This way, you can enjoy a lower rate and pay the reduced home loan EMIs. You will need to pay processing charges to a current lender for transferring the loan. What’s more, leading lenders also let you opt for a top-up loan up to Rs.1.5 crore when you switch the home loan to them. It can be used to pay for your other expenses and goals in life.