Different Types Of Home Loans That You Must Be Familiar With
8 type of home loans you must be familiar with
For a home owner, it is not possible to always have the amount ready in full to get the dream home. Here comes the need for home loans. You can avail home loans for construction as well as to buy a ready-to-move-in house.
There are different types of home loans available in India with a wide range of interest rates depending upon the lending institution. The last decade has witnessed a massive change in the home loan industry. Individuals apply for home loans to own their dream homes.
Here are few of the most noted type of home loans for constructions and home buying listed for you –
These are the most common form of home loans that individuals avail to buy a new home that they are ready to take possession of or a property that is already in use and the buyer purchases it from the old owners. An individual can avail these loans at skimming premium rates, as hybrid loans or on settled interest rates.
2. Land purchase – development at later stage
When you want to custom build a home then this kind of home loan would suit your needs. These home loans are taken to buy a plot on which you can build your dream home. Most of the leading banks lend up to 85 per cent of the land cost and these loans can be utilized for private construction purpose.
3. Home extension – adding some new features or rooms
An individual can seek a home extension loan when he/she wants to add new features to the existing structure of the house. Extension broadly incorporates modification of the existing house to add more space such as an extra room, an upgraded washroom, installing a gallery or library, etc.
4. Home construction – building from the scratch
For people who want custom built homes rather than pre-developed houses, home construction loans are the best options. The buyer needs to buy the plot within the same year of obtaining the construction home loan, so that the cost of the area can also get incorporated in determining the cost of the house.
5. Home improvement – enhancing and furnishing an old house
People who want to redesign, remodel or undertake repair works might avail home improvement loans. Interior and exterior painting, repair works, electrical work, plumbing, water-sealing and improvement of overhead or underground tanks fall under the scope of this loan scheme.
6. Balance transfer – exchanging loans from one bank to the other
An individual can take advantage of such a home loan for construction when he borrows from one bank and later wants to exchange it with another bank. Usually, it happens when the borrower is not satisfied with the primary lending bank’s services or is interested to reimburse balance of the credit amount at a lower rate of investment.
7. Home conversion – new home owners wanting to buy an alternate house
Home conversion loans are for buyers who have acquired a house officially with a home loan and still need to buy an alternate home and move there. Using these loans, they can get the new home at a subsidized rate by exchanging the existing loan to the new home. Reimbursing the old home loan doesn’t have a compelling reason.
These are transient house loans for official owners of private property who want to make a new purchase. These loans help them reserve the purchase of the new house until the old house is sold.
Getting the right kind of loan for your home with maximum tax benefits is just like the icing on the cake. Apart from purchasing houses, banks give loans for an assortment of purposes that are related to home buying. Loans for constructions or buying a house vary depending upon the needs of the buyers as well as the income bracket they belong to.