Home Loans have become a popular financing method to help Indians in building their dream houses. We Indians are connected to our roots, and love the idea of living in our own place. Over the last decade the demand of home loans have instantly increases because of the attractive features and policies that are being offered with them.
Most people today are also attracted towards these loans because of the secured loaning options which comprises of lower home loan interest rates. And today bank provides not only for investing in a land or property but also to recreate and renovate people houses to help them transform into their small beautiful paradise.
Here we have listed some of the type of Home Loans that are provided by most banks in the country.
Type of Home Loan
- Land Purchase Loan
This is a very popular type of Home loan in India, which is taken in order to invest in a plot of land, where the applicant wishes to construct his/her house. Most people in metropolitan use these services for investment purposes in the nearby state, which can also be used for residential purposes. All the major banking brands like ICICI and Axis Bank in the country offer financing services to purchase a land.
- Home Purchase Loan
Home Purchase loan is used for buying a new or pre-owned home. Majorly all the banks offer this loan. It is the most basic format of home loan, where the applicant seeks helps from a financer to purchase his/her own place. They are available with different features and variants in different banks. In this house financing, the applicant can apply for over 85% property value from the bank as a loan. These loans usually involve a fixed or variable interest rate.
- Home Renovation/ Improvement/Construction Loans
These loans can be availed by applicants who want to renovate or contrast their house, rather than investing in a new house. This loan sanctioning process follows a different procedure than other types of home loan.
Terms and Conditions Involved in Construction Loan.
- The house that the applicant wishes to reconstruct should have been brought in a span of one year. In case the house is older than 1 year the applicant won’t be eligible for this clause.
- Applicant is expected to make a rough estimate of the amount that would be required for the renovation, so that he able to apply for the loan.
- It completely depends on the bank whether they want to sanction the loan or not.
- The loan can be disbursed in one go or in installments depending on construction progress of the house.
- NRI Home Loans
This loan is exclusively designed for non residential Indians, who wish to buy a residential house or property in India. All the formalities, applications and policies involved in this procedure are different from other loans, as it demands the bank to check the details of NRI applicants. Most public and private sector banks provide these home financing services to NRI’s.
- Home Conversion Loan
Applicants who already have a home loan which they have used to purchase a property, but wish to shift and buy another house, can opt for this loan. This loan basically allows the borrowers to shift already availed loans, on the other property they wish to invest in by putting the previous one in auction. The loan amount is simply transferred to the new house without any hassle. However this is very expensive alternative with high interest rates which we won’t recommend to use unless necessary.
- Home Extension Loans
Just like Home Renovation Loan, this loan amount is invested in the existing house of the applicant. People who wish to build a new room to extend their balcony can apply for this loan. Banks like HDFC and Bank of Baroda offer these services exclusives to people who want to make vivid alteration in their current home. It follows a similar procedure like the home construction loan, which demands the applicant to have can estimate of the total cost, in order to apply for a appropriate loan amount.
- Bridge Home Loans
This is another popular form of home loan, which can be used by applicants who wish to invest in a new property by selling their old or existing property. Most people sell their old house and upgrade into a new house using the funds from its sale.
Typically they are a small term loan. It helps the customers directly shift to the new house without waiting for buyer to invest in the old property. Banks usually weigh the price of the existing property, and then sanction the loan for the new home, to ensure the applicant’s repayment creditability. Bridge Home loans mortgage is expendable up to two years. This service is offered by banks like HDFC and Vijaya Bank in India.
The above mentioned loans majorly occupy a major part of India’s home loan industry.