Home loans are becoming more and more popular these days, people are getting home loans to be able to afford their dream homes. Unlike the popular opinion, home loans aren’t only of one type but they are of various types of Home loans which help in the different stage of buying a house.
Following are the various types of Home Loans
1. Land purchase loans
As the name suggests, these loans are the ones that the bank provides for buying the plot/land on which you’d wish to build your house. Most banks give a loan which covers 85% of the price of the land.
2. Home purchase loans
Home purchase loans are the most widely used type of home loan in the market. People use Home purchase loans to buy a new flat or an old apartment from its previous owner.
Again, in these loans banks cover up to 85% of the price of the flat. These loans may have fixed or flexible interests
3. Home construction loans
The plot of land on which the borrower wishes to construct the house should have been purchased within a year for the cost of the land to be included as a component for calculating the total price of the house. If the plot has been bought more than ayear ago, then the above mentioned condition is not applicable. The approval process of these loans is slightly different from home loans.
The applicant needs to submit a rough estimate of the cost of construction of the house, the lender then takes it from here, he analyses further and decides whether to approve it or not.
4. Home expansion/Extension loans
Home expansion loans, A.K.A Extension loans, are used by people who wish to apply for a loan to expand their existing flat. For e.gIf you’d want to add another floor to your house or say build a new room, Home expansion loan is the one that you should go for.
5. Home improvement loans
Slightly similar to Home expansion loans, Home improvement loans are provided for people who want to internally renovate their house. Home improvement loans and Home expansion loans often overlap in some banks.
6. Home conversion loans
Home conversion loans are the type of home loans which are used by borrowers who already have taken a loan to buy a new flat. But who now wish to shift to a newer apartment. For such borrowers, Home conversion loans are there in which they can transfer the loan from their old house to the new one. Although these types of loans are useful, they are slightly more expensive than the others
7. NRI home loans
It is difficult for NRIs to get a loan in India as there’s a lot of paper work and scrutiny involved, as a result, banks have come up with NRI Home loans that are specifically meant for NRIs to make their process of buying a flat easier.
8. Balance transfer loans
Balance transfer loans are used by borrowers who want to transfer their existing loan from one bank to another.
9. Stamp duty loans
Stamp duty loans can be used strictly to pay the stamp duty fees while buying an apartment. Though, these types of home loans are rather rare.
10. Bridged loans
Bridge loans are used by borrowers who already own a house and who wish to shift to a new one. Bridged loans helps borrowers in funding till they find a good deal for selling their old flat.