Are you planning to buy a dream home or want to make some changes to your existing home? If yes, then don’t fret in case you don’t have enough funds or just don’t want to exhaust your savings. You can get home loans for a variety of purposes, other than just home purchase in India. Just choose the ideal one based on your housing needs and make your dream come true.
In India, banks offer home loans for a variety of purposes which include home purchase, plot/land purchase, home construction, home improvement/renovation, home extension, etc. Hence, whatever the purpose may be, you can avail a home loan to fulfill all your housing needs.
If you are a first-time borrower and don’t have any idea about the vast housing finance market in India, here is a guide on the various types of home loans that are available in India:
Plot Loan:
You can avail a plot loan to purchase land and build a dream home thereafter. Several Indian banks offer up to 80-85% of the value of the property to fulfill your dream of owning land. If you have been long cherishing a dream to have the plot to call it your own, now you can make it come true through a plot loan. Avail a plot loan, build your own space and build a home in whatever way you like.
Home Loan:
This is the most common housing loan variant offered by banks and NBFC’s in India. You can avail a home loan at a lower interest rate either to purchase a ready-made flat or a house. If you are already owning a house/flat with or without a loan you can use the loan to own a second house/flat. Certain banks even offer funding to customers having two houses to purchase a 3rd and subsequent dwelling unit.
Ideally, banks offer up to 80-85% of the price of the plot that you are going to purchase.
Home Construction Loan:
If you don’t have a house of your own and want to build one soon, go for a home construction loan. It makes for the best borrowing option for individuals who don’t want to buy a ready-made home but want to build one as per their requirement.
Banks usually ask such borrowers to purchase the plot within a year of taking the loan so that the expense can be incorporated as a part of the total home cost.
Home Extension Loan:
If you already have an existing home that you want to extend and make more spacious, then the home extension loan is the ideal option. Such extensions include modification in the present home structure, building more rooms, constructing kitchen or bathrooms, a balcony, or just increasing the carpet area.
Home Improvement Loan:
Do you want to give a new look to your home interiors? A home improvement loan is what you can choose. Whether you want to renovate your home or add some amenities to make it more comfortable, it will serve your purpose. Right from redesigning your home to remodeling it, carrying out painting and electrical work, and waterproofing you can finance all types of renovation activities with this loan.
Some banks even allow customers to buy household items, furniture, and electrical appliances. You can get up to Rs.15 lakh under this type of loan.
Composite Loan:
A composite loan is a home loan variant which is a combination of a home loan and a plot loan. If you don’t have a self-owned property but planning to buy a plot on loan and build a home on the same, this is the most ideal one. This loan scheme not only provides funds for the purchase of land but also for construction on that plot of land. However, this special home loan scheme is offered by a limited number of banks in India.
NRI Home Loan:
As the name suggests, these loans are offered only to the NRI borrowers. If you are an Indian who is not residing in India but want to own a residential property here, this is the only home loan option that you can go for. Though this home loan variant is similar to that of a standard housing loan, the paperwork involved in it is a bit lengthier.
There are several legal formalities that you will be required to complete before getting the loan disbursed to your account.
Home Conversion Loan:
This loan variant enables you to transfer your home loan scheme to another one within the same bank. If you have purchased a home through a home loan but have found a better one now, a home conversion loan is what can come to your rescue. Even if you have availed a loan for the home where you currently live, you can still transfer the existing loan to the new house. Besides, you can also get extra funds required to buy the new house.
Since your loan gets converted you needn’t pay for your previous loan when you opt for a home conversion loan.
Home Loan Balance Transfer:
In case you are not happy with your existing home loan due to its high-interest rate or longer loan repayment tenure or you are just not able to pay off your existing loan amount within the specified tenure, you can opt for a home loan balance transfer. By availing this facility, you can not only exchange your existing loan with another bank at a lower interest rate but can also take a new loan at your own terms. Most of the Indian banks offer this provision to the customers to help reduce their loan burden. You can expect to up to 90% of your home improvement cost.
Home Loan Top-Up:
In case you need more funds/cash to meet any of your personal, professional, or business needs while you have an existing housing loan you can avail a home loan top-up. Also known as home loan enhancement or home loan plus, such loans can be availed for any purpose except for speculative purposes. Such schemes are specially designed for the existing housing loan borrowers and can be used for meeting all personal needs without any interference of the bank.
Since such loans are offered along with your existing loan, you needn’t go through the entire loan application process once again. Some banks offer up to Rs.5 crore under a home loan top-up scheme.
So, these are the most common and most sought-after home loan variants offered by the banks in India. These make for great borrowing options for individuals who want to buy a home or land without exhausting their capital.
However, before selecting a particular loan, make sure to compare the various home loan options rolled out by the lenders to grab the best deal. You can compare various home loan schemes by visiting reliable third-party websites such as BankBazaar. Also, don’t forget to check your home loan eligibility by using the Home Loan Eligibility calculator before applying with any specific lender.
