A Roman Philosopher Pliny once said, “A home is where the heart is”. Crore of Indians believe the same when they plan to buy a house of their desire. But when it comes to getting a new house, one faces many options. You can build a house, extend the existing house or buy a new one. Banks and NBFCs in India help its customer by giving a home loan for various house related needs. Know more about exactly what types of loans Indian banks and NBFCs offer…
Home Purchase Loans:
Obvious to the name, this type of loan is given when you specifically need to buy a home. Be it a flat or a bungalow, all banks and NBFCs offer home purchase loan. This is the most popular type of loan and highest number of consumers opts for this type of loan.
Home Loan for Construction:
Many consumers prefer building their own house instead of purchasing a builder given format. But constructing a whole house doesn’t come cheap and surely needs a hefty financial backing. Thus consumers borrow money from bank or NBFCs to construct a house of their choice. But the rules and mechanics of getting a construction loan is very different than a home purchase loan. The land on which the house will stand, is supposed to have bought within a year of getting the loan as the cost of land is counted as part of the construction loan. The cost of land is excluded from the loan amount, if the land was purchased earlier than one year. Also to get the loan, the borrower is supposed to give an estimated lump-sum construction cost to the lender (banks and NBFCs). Once receiving the cost, the lender (banks and NBFCs) evaluates and decides whether to sanction or reject the loan.
Home Loan to Purchase a Piece of Land:
Consumers, who want to live in a self-build house, need a piece of land or property to do so. People also buy a land with an intention of sheer investment. To buy such a land in your name costs a fortune. Here you can opt for this type of loan. But this type of loan is not necessarily offered by all banks or NBFCs. You can get this type of loan only if you are purchasing a vacant plot. The term, the interest rate and procedure for this type of loan is similar to basic home purchase loan.
Home Loans for Extension/Renovation:
Many times consumers wish to further construct or renovate their existing house. Like adding an extra floor or renovating the exteriors and interiors keeping the original structure the same. These loans are becoming popular day by day as people are more interested in renovating existing house than buying a new one. Also this type of loan offers similar interest rates as basic home loan.
Home Conversion Loan:
Many time consumers change their residence. It can be for any personal or professional reason. But moving into another house doesn’t come cheaper either. If one already has a home loan on earlier purchased house and wishes to move into a new house buy getting a new home loan, this type of loan is a savior for them. The home conversion loan helps you to transfer the current loan from your old house to your new house.
Balance Transfer Home Loan:
The interest rates in home loans change as per the RBI Cash Reserve Ratio (CRI) from time to time. So while purchasing the loan, if a bank offers you the lowest interest rate, can change the percentage in a few years. So instead of paying extra interest rates in future compared to other institutions and regretting over it, you can transfer the home loan to another institution which offers interest rates suitable to your budget. You can use this type of loan to transfer your home loan from one bank to another. This way you avail yourself for better interest rates.
People who are living outside India, also known as Non-Resident Indians (NRI) buy property in India for investment or for their family back home. The terms, requirements, interest rates and procedures are different for them as compared to the basic home loan. These are specifically designed for NRI’s.
Pradhan Mantri Awas Yojana:
This government scheme also known as PMAY, was earlier known as Indira Gandhi Awas Yojana. In June 2015, the government announced Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana which gives every Indian citizen a chance to get his/her dream house. Almost all banks offer loan in coalition with this scheme.
Have you decided which type of home loan you want to take? Now, click here to check your eligibility for the same.
