Home loans are one of the key loans offered by banks. In India, the demand for home loans has drastically increased over the last decade. A home loan is a convenient funding option for a buyer, as it provides a lump sum to buy the property as well as offers tax benefits. Discussed below are ten popular home loan options offered by the banks in India.
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Loan to Purchase a Plot: This type of loan is availed by the borrower to construct a house on a land plot. The loan is sanctioned for the purchase of the plot. The borrower may choose to construct the house at a later time, as and when finances permit. The bank funds up to 85% of the cost of the land. However, the borrower cannot avail tax benefits on such loans.
Home Purchase Loan: This is one of the most popular kinds of home loans offered by banks. These loans are availed to purchase a new property or a resale property and the rate of interest on this loan is either fixed or floating. The borrower can avail tax deduction under the Income Tax Act for this type of loan. The loans sanctioned by the bank, funds up to 85% of the cost of the project, the rest must be paid by the borrower as a down payment.
Loans for Construction of Home: Home loans can also be availed for the construction of a house. The banks evaluate the cost of the land and sanction the home loan amount for the construction of a house. Loans for house construction can only be availed for land purchased within the same year. All major commercial banks offer loans for construction of a house.
See Also: Home Loan Interest Rates Rising
Home Improvement Loans: Home improvement loans are mainly availed by borrowers for renovating their homes. The lenders offer both secured and unsecured home renovation loans. Such loans are availed for home improvement projects like construction of a water tank, ceiling or floor repair, painting and electrical renovation. These loans have a fixed interest rate and are repaid over a pre-specified tenure.
Home Expansion Loans: These types of home loans are availed to accommodate growing family needs. Home Expansion loans help the borrower get the required funds for the extension of the existing house like adding rooms, adding a terrace or an extra floor. A good credit score helps the borrower get an unsecured home extension loan.
Home Conversion Loans: These schemes are specifically designed for borrowers who have already availed a home loan from a bank or any other financial institution. Home Conversion Loan enables the borrower shift their loans to a lower interest rate, with the same bank. Such loans are availed by individuals who wish to avail a new home loan for the purchase of a new house. The outstanding amount of the previous loan is transferred to the new loan. In this way the borrower can benefit due to fluctuating interest rates.
See Also: What Is My Home Loan Eligibility?
NRI Home Loans: As the name suggests, NRI home loans are specifically designed to meet the home loan requirements of non-resident Indians. Nowadays, the real estate developers are offering convenient home buying options. The banks are helping the NRIs arrange funds for buying homes in India through the NRI home loans. NRI home loans are a popular option among NRIs due to attractive interest rates, minimal documentation, flexible repayment options and virtual guidance and services.
Stamp Duty Loans: These loans are mainly availed by borrowers to fund stamp duty on purchase of a property. Stamp duty charges account for almost 6% of the market value of the property. The stamp duty charges vary across cities and are not funded by the bank. However, this loan is not very popular in India.
Balance Transfer Loan: A borrower can avail a balance transfer loan if their current lender charges high interest rate. The outstanding home loan balance can be transferred to a new bank at a lower interest rate.
See Also: Ready For A Home Loan
Bridge Loan: A bridge loan is a short term secured loan, availed by borrowers against an existing property to fund the purchase of a new home. Also known as gap financing loans, these loans are availed for a period of 6 months to a year. Bridge Loans as the name suggests, are meant to bridge the gap, between short-term cash requirements and long-term loans.
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