Types of Home Loans that Every Home Buyer Should Aware

In everyone’s life buying a home is a costly affair. Presently, with soaring prices it has become very hard to buy a dream home without availing home loan. From last decade, the demand for home loans is increasing exponentially in India. A home loan not only offers a fund at cheaper costs, it also has an added advantage like attractive Tax benefits. The following are the different types of home loans offered in the Indian housing market.

Land purchase Loan:

This Land purchase loan is offered to purchase a plot of land on which a borrower wishes to build a home. The interest rate of this loan is same as home loan, but there is no availability to claim a tax deduction. Lenders offer almost 80-85 percent of the land price.  The banks that are offering such types of loan precisely ICICI Bank, HDFC Bank and Axis Bank.

Home Purchase Loan:

This type of loan is commonly available home loan for every individual. This loan can be taken for purchasing a new residential property, old house/resale property from the previous owner. This type of loans is offered at fixed interest rates and floating interest rates.  Usually, in this type of loans lenders finance up to 85 percent of the property price and one can claim a tax deduction on the interest paid. All leading banks and housing finance companies offer such type of loans.

Home construction Loan:

This type of loan is available to an individual who plans to build a home instead of buying a constructed home. Compared to commonly avail home loans, the approval process and application form of these loans is somewhat different. Before applying the Home construction loan, the borrower has to estimate the total cost required for the construction of a home. After analyzing all the aspects, the lender will take a decision to endorse the loan. The total price of the home will be calculated by considering the cost of the land, if the land has been bought within a year. The banks that are offering such types of home loan precisely UCO Bank, Canara Bank and Bank of Baroda.

Home Improvement Loan:

This type of Home loan is available for individuals who already own a house and planning for renovation. It includes internal and external painting, electrical work, major repairs, construction of overhead tank, construction of underground and many others. Banks that provide such type of home improvement loans are Vijaya Bank, ICICI Bank and Union Bank of India.

Home Extension Loan:

When individual plans to expand/extend the existing home like constructing extra floor, balcony, new room and bigger bed/bath room then the Home Extension Loans are useful. Some lenders usually offer Home improvement loan for such purposes. Banks that provides home expansion loans precisely Bank of Baroda, HDFC Bank and many others.

Home conversion Loan:

The individual who already bought a home by taking a home loan, but now wish to buy another home can pick a home conversion loan. Through this type of loan, borrower can fund the purchase of new home by transferring existing home loan to the new home. These loans are comparatively quite expensive and there is no need to repay the loan for the previous home. This can be offered by HDFC Bank.

NRI Home Loans:

This type of home loans is specially specialized to assist Non Resident Indians. It helps NRI’s to acquire a residential property in India. The procedure to obtain this NRI Home loan is same as home loan, only the paperwork will be more. In addition, if the NRI has an Indian income they can gain tax benefits. All public and private banks offer such loans.

Stamp Duty Loans:

The individual who feels burdensome to pay the stamp duty charges on property can apply for stamp duty loans. This type of loans has not gained much popularity in India.

Balance transfer Loan:

If an individual is not satisfied with the bank services as he feels that the lender is charging high interest rates and want to transfer the loan to another bank can opt for Balance Transfer Loan. This type of loan is offered precisely by Kotak Mahindra Bank, ICICI Bank, Deutsche Bank and many others.

Bridged Loans:

An individual who already owns a house and planning to purchase a new home can opt for bridged loan until he is found for the old home. Once the old home is sold, the lender can repay the loan amount. In such a case the individual has to mortgage new home. The banks that are offering bridged loans are HDFC bank, Vijaya Bank and many others.

While applying a home loan, every home buyer should be aware of different type of home loans in the Indian market to opt for an appropriate one.