In India, buying a house has become the benchmark for getting settled. Now, many people dream of buying houses, and most of them do so with the help of home loans. But did you know there are different types of housing loans? To meet the needs of different sections of society, lenders offer various home loan products.
5 types of home loan plans that are offered by lenders:
- Home Construction Loan
If you own a piece of land and wish to construct a house on that land, you can apply for a home construction loan. With a basic housing loan, a lender makes a lump sum payment of the loan amount. However, with a home construction loan, the amount is disbursed in instalments depending on the construction project’s progress. Lenders usually approve the loan amount based on the approximate expenses for construction.
- Land Purchase Home Loan
Land or plot can be purchased by applying for a land purchase home loan. This loan can even be used for constructing a house. Lenders offer these loans for investment or residential purposes. A land purchase home loan can cover up to 85% of the total value of the plot. With a positive credit score and a good repayment record, it is possible to apply for this loan even with existing home loans.
- Standard home loan
This is the most common and popular type of housing loan that borrowers apply for. You can apply for home loan to buy a house of your choice. Upon fulfilling all the home loan eligibility criteria of a lender, it is possible to receive 80-90% of the total cost of the house. This loan can then be repaid in monthly instalments.
- Home Loan Balance Transfer
Many borrowers shift their home loans from one lender to another. If you find another lender offering better benefits than your current one, you can opt for a home loan balance transfer. Mostly, the reason for going for a home loan balance transfer is for a better home loan interest rate. Before making the switch, make sure to read the documents required for home loan balance transfer. This is to consider the actual savings made through the new lender after additional expenses such as processing fees and more.
- Home Expansion Loan
There are many instances where borrowers look to expand their homes. This could include adding a room or even a separate floor to the house. For such expenses, you can apply for a home expansion loan. Even if the house needs certain improvements or a complete renovation, a home expansion loan can provide the financial cover for it. Now, the expenses for a home extension can go into lakhs. Going for a home expansion loan will help avoid spiralling your costs.
No matter which loan you go for, always make it a point to pick a loan plan that is easily repayable. Make use of a home loan EMI calculator to learn about the loan’s EMIs. This will help you in making an informed decision in picking a suitable loan plan!