Home Loan types: Different types of Housing Loan in India

Vikram had just purchased a home. While he wasn't married, and had just begun his career five years ago, this was the equivalent of scaling Mount Everest. And in his books - irrespective of what family and friends said about marriage - Vikram had actually settled down. Many friends agreed. After all, buying a home in India is a tough task, given the rise in real estate prices. Fortunately, banks and non-banking financial organisations offer several types of home loans, depending on your requirement. There are home loans for women, agriculturalists, and even for purchasing land.

 

Types of Home loans

Thanks to the demand in purchasing real estate, and the tax benefits that one can avail from a home loan, banks and non-banking finance institutions have the following home loan products available in the market that cater to your needs.

 

Loans for purchase of land

People buy land as an investment, and several banks and non-banking financial institutions offer loans for purchase of land. If you are looking to buy a dream home that you can cherish, you can first avail a loan for purchase of land as an investment. Following this, you can save up on funds and construct a house when the funds allow.

 

Loan for buying a house

The most common reason why people opt for a home loan is to buy the first house. The loan is provided by most private and public sector banks and competitive rates of interest that can either be fixed or floating, usually between 9.85 per cent and 11.25 per cent. Usually, banks can provide up to 85 per cent of the house price. However, the loan is only disbursed after you pay the initial 15 per cent.

 

Loans to construct a home

These loans are designed for those who want to build a home from scratch, rather than buying a pre-constructed house. While banks offer these loans, the approval process is slightly different, as the bank also takes into consideration the cost of the plot as well. While applying for a home construction loan, you need to remember that the plot of land MUST be bought in the past year, so that it is included in the loan amount. The amount may be disbursed at one go, or in multiple instalments Banks that offer home construction loans include Canara Bank and Bank of Baroda.

 

Home expansion loan

If you want to add another bedroom or add a balcony, you can approach a bank and apply for a home expansion loan. However, there are some terms and conditions involved, which include not damaging the foundation of the structure.

 

Home conversion loans

If you are a homeowner who has an existing home loan and want to move to a new house can opt for home conversion loans. They can do this by transferring the current loan to the new house in question. This way you can fund the purchase of the new home and need not repay the previous home loan. Although it is convenient, such loans are expensive.

 

Home improvement loans

If you’re looking to renovate your home, you may want to consider applying for a home improvement loan will ensure that you don’t burn a hole in your pocket. Banks such as ICICI Bank and Vijaya Bank offer specialised home improvement loans.

 

Balance transfer home loans

Balance transfer home loans are availed when you want to transfer your home loan from one bank to another owing to reasons such as low interest rate or better services.

 

NRI Home Loans

Banks have specifically created NRI Home Loans to cater to the audience living outside India. The application process and documentation to avail an NRI home loan is slightly different from the other home loans in India, as you would also be required to also provide your passport and your work visa as proof.  Generally, most of the private and public sector banks offer NRI loans as a product of their housing loan portfolio.

 

Bridged Loans

These loans are short-term loans that aid borrowers to fund the purchase of a new house until a buyer is identified for the existing property. Bridged loans require the new house to be mortgaged with the bank and can be extended for less than two years.

 

Stamp Duty Loans

Stamp duty loans are offered to cover the stamp duty charges during the purchase of a property.

 

FAQs

 

How much loan am I eligible for?

Most banks can give up to 85 per cent of the value of the property, but this also depends on factors such as your current salary, your credit score, and the amount you can shell out each month. Also, check out the bank's rate of interest, as well as features and benefits before finalising on its home loan product.

 

What are the documents required for a home loan?

Keep these documents handy before applying for a Home Loan:

-Photo ID and age proof

-Signed Application form with a photograph

-Residence proof