Home loans have become the only feasible choice these days for those who are looking to buy or build a home. The demand for home loan in Delhi NCR has augmented manifold in the last few years and the extra benefit of getting tax benefits is just an icing on the cake. Daily several people take loans from banks to purchase their dream home.
Diverse home loan products cater to the diverse requirements of each person. I am listing six most popular home loans of India:
Home Purchasing Loans
Home loans for buying a new home is the most popular and easily available kind of loan. It is for either acquiring a new property or an old home. The bank finances about 85% of the house’s market value. The interest rates are either floating, fixed or hybrid loans. All banks and housing finance companies offer this loan.
Land Purchasing Loans
These loans are for buying the plot/land upon which the borrower wants to construct a house. Like home purchasing loans, the bank finances for 85% of the land’s market value. The loan isn’t limited to only residential homes, it can be taken to purchase land for the investment purpose too.
Home Construction Loans
Those who want to build their own houses on plot/land they have already bought use this loan. This loan application is quite different from the earlier loans. The said land should have been purchased within the year so that the land price can be integrated as a factor when assessing the entire value of the house. The above clause isn’t applicable if the land has been bought for longer than a year. The borrower has to make a rough estimation as to how much the house construction would cost and apply for the loan as per this cost. The lender after analysing the account will decide to grant the loan or not. The loan amount may be paid in one single payment or in many instalments.
Home Improvement Loans
These loans are applied by individuals who already have a house and want to attain funds to refurbish it. All kinds of repairs and renovations like painting, electrical set-up, plumbing works, etc can be done by using this home loan.
Home Expansion/Extension Loans
Those who want to pay for expand their current dwelling take these loans. ‘Expansion’ comprises any changes to the current house structure i.e. constructing a new room, a finer bathroom, enclosing a veranda, etc. Whilst most banks offer loans for this as element of home expansion loans, some banks provide the money for the same reason as home improvement loans.
Home Conversion Loans
Borrowers who acquired a house by availing a home loan but now want to purchase and move into another house select this loan. The borrower can fund the purchase of the new house by reassigning the existing loan to the new house. While there isn’t any need to reimburse the previous house loan and is incredibly helpful tool, this type of loan has been blamed of being highly costly.
Do your research before taking a loan so that you are fully aware of their various features.