Owning a home is one of the top financial goals of almost every individual in India. Everyone wishes to buy a house that is grand, comfortable and beautiful. However, purchasing a house is not a child’s play, thanks to the exorbitant real estate prices. Buying a house through your pocket can consume a substantial part of your savings.
Thankfully, home loans exist. Home loans are an easy means to buy the house of your dreams without draining your savings. There is a variety of housing loans available that you can choose from as per your need. Read on to know more.
What Is a Home Loan?
It is an amount of money you can borrow from a bank or a financial institution to purchase your dream house. Depending upon your eligibility, you can finance 70-90% of your property value with a home loan. You can avail a home loan at a certain rate of interest and repay it through flexible tenure with EMI.
Types of Home Loans
- Home loan (for house purchase)
With a housing loan for home purchase, you can borrow money to purchase your dream house. You can take a home loan at a fixed or floating rate of interest and repay it in monthly instalments. If you have a high eligibility, lenders can fund 80-85% of your property price.
- Home improvement loan
If you have a house that needs renovation, you can avail a home improvement loan. With a home improvement loan, you can finance the cost of home renovation and repairs. You can take a home improvement loan to add an extra room, bathroom or lobby. You can also use this loan for repairing or renovating parts of your home, like painting walls or waterproofing, electric wiring, etc. Some lenders offer different loans for home improvement and extension. However, many offer a single loan for home improvement, extension and repairs.
- Home construction loan
Home construction loans are for applicants who want to construct a house on a plot of land owned by them. The disbursement of these loans is done in instalments according to the construction progress. The lender considers the estimated cost of construction before approving the loan amount.
- Bridge loans
These loans are short-term loans for existing homeowners who wish to buy a new house by selling off their old one. This loan helps fund the purchase of the new home while your fund is stuck in the old house. A bridge loan is usually available for up to two years.
- Home loan Balance transfer
If you come across a lender offering a lower interest rate on a housing loan than the one you are servicing, you can transfer your loan. This system is called home loan balance transfer. With this loan, you can shift your housing loan to a new lender and benefit from lower interest rates and better deals.
You must identify your needs and ascertain the amount of money needed to find the right home loan for you. Before you apply for a home loan, research the various aspects of it and then consider lenders based on their interest rates, tenures and features.