Different Types of Home Loan Everyone Should Know

In India, applying for home loan is the most common and convenient way to buy a dream home. Research suggests that, over the past few years, with the growing number of financial institutions offering housing finances, the number of people applying for loan have increased manifold. The various benefits attached with getting a housing finance like tax cuts and banks offering different kinds of loans to suit different needs of the borrowers have only made housing finance more feasible for home buyers. For most of the people tax benefit is the biggest benefit from availing a home loan. The banks nowadays offer different kinds of loans or even customized loans that suit the needs of the borrowers. Such benefits have only made housing finance more feasible for home buyers. Below listed are a few of types of home loans available in the market:

Home purchase

This is the most common type of home loan prevalent in India and the most easily accessible variant. There are plenty of banks as well as private financial organizations that offer loan for home purchase at attractive interest rates. The key to avail the best deal is to make a thorough comparison of the quotes and choose the one that is most cost effective rather than just going with the bank that offers the lowest interest rate.

Land Purchase

Land purchase loan, as the name itself suggests, is availed for buying a piece of land on which you wish to build your real estate property. This loan can be obtained for building home for self-occupation or commercial use. Typically, most financial institutions in India offer loans up to 85% of the value of the land. This type of loan can prove beneficial for people who dream of building their house as per their needs rather than buying a ready-made apartment from a builder.

Home extension loan

At some point in life, everyone needs to upgrade their current home and make certain modifications, be it the addition of a new bedroom or extending the balcony. If you want to make any alterations to the existing structure of your home, you can avail home extension loan to fund the construction work. Before you apply for the loan, you first need to have a copy of permission letter from the concerned civic authorities sanctioning the structural modifications.

Home improvement loan

This type of loan is very similar to home extension loan, in the sense that you can avail funds under the scheme to carry out home improvement works like painting the exterior, undertake roof repair works, or refurbish the electrical and plumbing fittings in the home. Typically, this type of loan is availed by people who wish to increase the commercial value of their property so that they can demand a higher price for the same while selling it.

NRI loans

This home loan type as the name suggests is exclusively for non-residential Indians (people who are Indian citizens by birth but have settled or live abroad) who wish to invest in buying a property in India. Several banks in India offer lucrative home loan schemes for the NRIs at the most competitive interest rates and affordable repayment schedules.

Bridge Loan

This type of home is for people who want to sell their existing house and purchase a new home. A bridge loan is a financial arrangement with the lender that helps you get the required funds to pay for your new home until you find a buyer for your old house.

Stamp duty loan

When you buy any kind of real estate property, you are mandated to pay a stamp duty, which is usually about 1% to 2% of the property value. If you are unable to pay the amount, you can avail the stamp duty loan, which is specifically offered by banks for this purpose.