It goes without saying that home loans are one of the most popular and convenient ways to finance the purchase or construction of a residential property. Home loans can also be used for home improvement, extension, or renovation purposes.
However, not all home loans are the same. There are different types of home loans in India, each with its own features, benefits, and eligibility criteria. If you are exploring the possibility of taking a home loan, then this guide will help you figure out your options in terms of different types of home loans in India.
Home loans are loans secured by a property, meaning that the lender can take possession of the property if the borrower fails to repay the loan. Depending on multiple factors, there are different types of home loans available in the market.
Some of the most common ones are:
This is the most basic and common type of home loan that allows you to buy a new or resale property from a builder, developer, or seller. The loan amount depends on various factors such as income, credit score, property value, location, etc. The loan tenure can range from 5 to 30 years, depending on your repayment capacity and preference. The interest rate can be either fixed or floating, depending on the lender and market conditions.
Some of the benefits of a home purchase loan are:
This type of home loan is suitable for those who want to construct their own house on a plot of land they own or have acquired. The loan amount is disbursed in stages as per the progress of construction. The interest rate is usually floating and is calculated on the basis of the outstanding loan amount at each stage. The loan tenure can be up to 30 years or until the completion of construction, whichever is earlier.
Some of the benefits of a home construction loan are:
This type of home loan is meant for those who want to renovate, repair, or upgrade their existing property. The loan amount can be used for various purposes such as painting, flooring, plumbing, electrical work, furniture, fixtures, etc. The loan amount depends on various factors such as your income, credit score, property value, location, etc. The loan tenure can be up to 15 years or until the completion of improvement work, whichever is earlier. The interest rate can be either fixed or floating, depending on the lender and market conditions.
Some of the benefits of a home improvement loan are:
This type of home loan is similar to a home improvement loan but is specifically designed for those who want to add more space or rooms to their existing property. The loan amount can be used for purposes such as building an extra floor, balcony, terrace, garage, etc. The loan amount depends on various factors such as income, credit score, property value, location, etc. The loan tenure can be up to 15 years or until the completion of extension work, whichever is earlier. The interest rate can be either fixed or floating, depending on the lender and market conditions.
Some of the benefits of a home extension loan are:
This type of home loan is ideal for those who want to move to a new property without selling their existing one. The loan amount can be used to buy a new property while transferring the balance outstanding on your existing home loan to the new one. This can be useful if you want to upgrade to a bigger or better house or if you want to relocate to a different city or area.
Some common features of home conversion loans are:
Hopefully, now you have a better idea of which type of home loan to seek in India best fulfils your requirement. By making an informed decision and choosing the right home loan, you can easily take care of your finances.
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