Having a house of your own is one of the most important milestones in one’s lifetime. However, it is a costly affair, which often leaves you splurging all your savings in a go. Therefore, a smarter and more convenient way to fit your dream house into a budget is by taking a home loan.
At a time when the prices of real estate are skyrocketing, such financial aid not only reduces the burden off your chest but also gives you enough room to repay the full amount in smaller instalments throughout the home loan tenor. Potential borrowers can choose from various types of home loans in India offered by different lenders to cater to their needs.
Different Types of Home Loans in India
Before getting their hands on a housing loan, borrowers must know about the different types of home loans in India. The most popular types are listed below –
Home Purchase Loans
These are home loans used to buy a property – it could be a resale property, built property, or a constructed one. In such cases, the lender remains the property owner indefinitely till the borrower is able to repay the loan amount. Once the amount is repaid in full, the ownership of the property is transferred back to the borrower.
Home Renovation Loans
This type of loan caters to the expenses one may incur due to a home renovation – painting, repairing or remodelling the exterior or interiors of the house, for instance changing the bathroom tiles or the flooring, to improve the overall appearance.
Home Expansion Loans
A home expansion or extension loan compensates for the cost incurred due to extending or expanding a part of the house. For instance, adding a second bedroom or extending the hallway to a balcony. Sometimes, borrowers confuse a home renovation loan and a home expansion loan, which is why borrowers should discuss the differences between the two with the lender before making up their minds.
Home Construction Loans
This type of loan provides funds for the construction of a new house and not for an existing property. However, some lenders include the cost of the plot in the loan amount under the condition that the plot was purchased within a year of getting the loan.
Home Loan Balance Transfer
The home loan balance transfer facility allows the borrower to transfer their existing home loan to a new lender for cheaper home loan interest rates and better lending terms so they can save up on the payable EMI. This facility may come with a top-up loan offering funds over and above the existing loan by up to INR 1 Crore.
Home Conversion Loan
This type of loan is offered by the lender when the borrower shifts the existing loan to a different type. For instance, if the current home loan is linked to benchmarks other than the repo rate, then the chances of the borrower paying a higher rate of interest are greater. In such an event, a home conversion loan may prove beneficial.
Joint Home Loans
A joint home loan is purchased by two or more individuals in a bid to share the liability and enhance eligibility criteria for a home loan. However, it must be noted that a maximum number of 6 people can opt for a joint home loan. Furthermore, such a loan can only be taken together by immediate family members, for instance, spouses, siblings, parents, and offspring.
Home Loans for NRIs
Such home loans are specifically designed for non-resident Indians. This allows NRIs to purchase a property in India while staying abroad. Thus, many NRIs prefer to opt for such home loans to buy houses in India instead of spending a large chunk of money out of pocket.
Home Loans for Women
For single, independent women, this type of home loan can be beneficial as it offers a host of advantages, including reduced home loan interest rates, longer home loan tenor, tax deductions, simpler documentation and eligibility criteria etc. Besides, they are also eligible for interest subsidies under various government schemes, like PMAY.
Knowing about the various types of home loans in India can help the borrower with diligent market research. However, before opting for the loan, they must go through the home loan eligibility criteria set by lenders for hassle-free approval.
Tips to Choose the Right Lender for Home Loan in India
When seeking the best home loan in India, borrowers should consider the following factors:
- Check if the lender is reliable and trustworthy
- Check your home loan eligibility to know how big an amount you are eligible for
- Check if the lender is offering the best home loan interest rate as compared to other competitors
- Look for part prepayment options
- Check if the lender is transparent with fees
- Check if the lender has an online presence and offers easy digital access
- Look for a lender who offers easy, hassle-free documentation
- Check if the lender offers easy EMI options with the help of a home loan EMI calculator
- Find out if there is any scope for one-on-one interaction with the lender
- Check if the lender has a strong and efficient customer executive team to assist you should there be a problem
- Consider the safety of your mortgaged documents
- Look for home loan add-ons
- Check if the lender offers home loan insurance coverage for your newly purchased property
When it comes to looking for the best housing loan, it all comes down to the needs and requirements specific to the borrower. The chances of getting a loan sanctioned are higher if one applies for the right kind of loan tailored to suit their financial needs. To pick the best among the different types of home loans in India, one needs to narrow down their searches based on the benefits offered and the interest charged before finalizing the top lender.