With the easy availability of loans, buying a home has become much easier for all. In order to cater to the financial needs of the people, financial organisations offer different types of home loans. Read on to know more about the different types of home loans in India.
In India, ‘settling down’ is often equated with owning a home. For several people, it is a dream to buy their own home, and most people rely on availing a home loan to make their dream come true. A home loan is the most definitive way and a practical solution to get the necessary funds for purchasing a home rather than using up your entire savings.
Today, financial organisations offer different types of home loans to suit the different needs of the people. For instance, some lenders offer home loans specially crafted for women borrowers, purchasing a land, etc. Knowing the different types of loan options can help you make the right borrowing decision.
- Loan for home purchase
It is the most common and popular type of home loan. You can avail a home purchase loan to buy a new or a pre-owned home. These loans either have a fixed interest rate or a floating interest rate. The lender and the borrower decide it before the first disbursement. You must know all lenders in India charge a processing fee for a home purchase loan and it varies from lender to lender. Ensure to check with the financial organisation about the interest rate and the processing fee beforehand to make an informed borrowing decision.
- Loan for land purchase
A lot of people in India prefer purchasing a land, either to construct a home on the land or for investment purposes. The interest rate for plot loan can vary from borrower to borrower. Some lenders even offer a special interest rate for women borrowers. It can vary from 8.15% to 9% based on the loan amount.
- Loan for home extension
The home extension loan, which is also commonly referred to as home expansion loan, allows you to get funds to carry out renovations in your home. You can avail this loan to build a new bedroom, expand the kitchen, or do any structural alteration to the home.
- Loan for home improvement
Home renovation and repair works like constructing an overhead water tank, painting, changing the electrical wires, can surely improve the aesthetic appeal of your home. But such work can be expensive. You can apply for home improvement loans if you lack funds to carry out innovative work in your home. There are many lenders in India that offer this type of home loan.
- Balance Transfer Loan
It is a type of home loan that allows you to transfer your loan from the current lender to a new lender to benefit from the lower interest rate or better services offered by the other lender. A lot of home loan borrowers avail balance transfer home loan to repay the balance amount at a revised interest rate. It is an excellent way to reduce your financial burden due to repayment of high interest on home loan.
- Top-up home loan
Top-up home loan is a unique and specialised financial product offered by various financial organisations that allow the home loan applicants to borrow a fixed sum over and above the existing home loan they have availed with the lender. You can apply for a top-up loan and use the funds for any purpose you want such as a home renovation or to meet other personal expenses like paying education fees, marriage, etc. The best thing about availing a top-up loan is that the interest rate is much lower than a personal loan.
There are different types of home loan products. Assess your needs and apply for the loan that best suits them.