Buying or constructing a home is one of life’s most important milestones for most people. It is a common dream shared by many. With escalating property rates in India, getting a home loan has become the only option for most people to realise their dream of owning a home.
Are you looking for the best home loans in India to fulfil your dream of owning a home? Fortunately, lending institutions and NBFCs in India offer various types of Home Loans to suit varying borrower needs, making it easier to find the best one that aligns with their needs. These loans can now help purchase that flat, bungalow, duplex, or even a plot of land that seemed beyond reach back in the day. Borrowers can now look forward to constructing their dream homes by choosing the right type of home loan.
Home loan calculator with prepayment options allow borrowers to estimate the impact of making additional payments towards their loan principal. This can help borrowers save money on interest and pay off their loan faster.
Let’s explore the different kinds of home loans offered by Banks and other financial institutions in India that help borrowers make informed decisions while applying.
Standard Home Loan
A regular or standard home loan is the most popular type, especially if you wish to purchase a residential property that could be pre-existing, newly constructed or under construction.
The loan amount provided by most lenders is generally 70% of the property’s value, which in some cases can even go up to 90%. The interest rate on this loan is either fixed or floating and determined before loan disbursal. The current interest rate on standard home loans is above 8% per annum, although this may vary based on your overall credit profile. Lastly, the maximum repayment term for this loan is generally up to 30 years.
Home Construction Loan
Banks and other financial institutions also loan people who wish to build a house on a piece of land they own or co-own. With other things being the same, home-construction loans differ from commonly available loans regarding their application and approval process. Differentiating factors include:
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The loan applicant must purchase the plot of land within a year after loan disbursal.
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The borrower is required to give a rough figure of the cost involved in building the house.
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If the borrower cannot provide the lender with an estimate of the actual cost, then only the estimated cost is considered factored into the loan amount.
Home Improvement / Renovation Loan
If someone owns a house but lacks the funds to renovate it, they can apply for a home improvement loan. Renovating a house may include repairing an existing property, repainting walls, rewiring, new lighting installation and more.
A cost estimate for the requested work must be provided to the lender by the borrower. The lender will next request a quote from a contractor to confirm the submitted estimate, money disbursed at the rate of construction work to the borrower or contractor to whom it is due.
NRI Home Loan
NRI home loans are specialised home loans designed to help non-resident Indians (NRIs) who wish to purchase residential property in India. Although this sort of home loan has a similar structure to standard home loans, the home loan required documents process is a bit more extensive.
Plot Purchase Loan
Individuals who wish to buy a piece of land for personal or commercial purposes can apply for a plot loan issued by banks or non-banking financial companies (NBFCs) in India. Typically, banks lend up to 80-85% of a plot or land’s market value as a loan.
Home Extension Loan
A home extension loan can benefit someone who wants to expand their home structurally. Banks and NBFCs accept applications for house extension loans from any eligible individual or couple.
Homeowners with a mortgage/home loan can add a house extension loan from the same lender. Loans for home extensions are more affordable as they have lower processing charges, can be easily obtained, and offers borrowers tax benefits.
Conclusion
With the knowledge of various types of home loans, choosing the one that aligns with your specific needs should be easy. Lastly, after choosing the right loan, you can look for reputed lenders and compare their interest rates and the EMI options before finally making up your mind.