Home is one of the basic requirement after food and air for every human on this earth. Home is the place where one feel most safe, protected and relaxed. Some have their own house and some use rented house to live in. The one who are capable enough financially they are having their own home and others try and save their best with a dream of purchasing or constructing their own home. In country like India it’s a dream of every common people to have a self-owned house. Now a days in big cities the price of houses are rising day by day and reaching sky in last few years and small cities are also not left behind and they are on a similar way. Home loan is the best option for those people who are having a dream like that and want to have their own house. There are several home loans which can be availed with different Banks. Home loan apart from helping you in your dream home purchase provides you a major benefit that is relaxation in your payable taxes. Apart from this when you own a home you in yourself feel more financially stable and emotionally too it makes you more strong. There are different kind of home loan based on different conditions so you have to choose wisely which is best for you.
Different Types of Home Loans in India
- Home Construction Loans:
Some people are there who don’t trust builders and all and they want to construct their home according to them instead of going for any apartment flat or any housing colony by some builder. This home construction loans are somewhat different from other home loans as-Bank is not going to give you fund for purchasing of land for your home. That means land price is excluded in this loan. You can go for this loan only when you are having a land.
You will not get the whole loan amount at the same time i.e. in one shot.The disbursal of you loan amount is dependent on the construction levels of your house. You will get the whole amount in approx. 2-5 installments. It’s important for you to get almost an approx. figure (amount) which you need for the construction of each level. Until your house is fully constructed you cannot enjoy the full tax benefit. Till your house is under construction you will be given rebate only for the interest not on the whole principal amount.
- Home Purchase Loans:
Home purchase loans are the most common and most popular home loans. In this people take loan to purchase a fully constructed home which may be new or old depends on the borrower. The maximum tenor period for this loan varies from bank to bank from 20 to 30 years. While going for this home loan interest rate is a big point which should be kept in mind because for home purchase loan there are fixed interest rates, floating interest rates as well as some banks offer hybrid interest rates which is a combination of both fixed as well as floating interest rate. So before opting you should be clear that which interest rate will suit you for home purchase loan.
- Land Purchase Loans:
Land purchase loans is also a kind of home loan only. In this loan people who are willing to construct their own house will first purchase land and after that they will start construction. So if you are planning to do so and not having sufficient money then you can go for this loan. In this loan you will get 80% of the net worth of the land and rest 20% you have to give. People in non-metropolitan are more in no. who are going for this loan.
- House Conversion Loans:
People can go with this loan when they want to shift to another home while having a home loan for their existing home. This can be done and few bank provide loan for this. When you are going to shift your home you are having to options first is pre close your existing home loan which was for your home, in this process you will be charges some pre closer charges by many banks. The other option for you in this case is that you can go with home conversion loan you can move to the new home with your pre-existing home loan.
- Home Extension and Home Renovation Loans:
A good and beautiful house comes with more positivity and confidence. Living in a big and beautiful house is everyone’s dream. In many cases it happens that when you purchase a house or build a house at that time because of lack of money you construct a house which your pocket allowed but later you wanted to extend your house or renovate your house with new and trendy interiors so for that you can go with home extension and home renovation loans. Usually the tenor period of this loan is from 10- 20 years and one of the advantage of going with this loan is that the interest is often tax free.
- Bridge Loans:
These loans are for a short period of time that is from 2 months to 2 years. As the tenor is very less the interest rate is high for this loan. This loan is used by the owner of a home to fill the financial gap when he going for a new loan for new property. So while he arrange for the newer one this loan will help them.
Points to Consider before going for any of these Home Loans
Home Loan Interest Rate: Interest rate is one of the most important factor which you should check before going for any home loan. The interest rate for you loan depends on the factors such as your loan amount, tenor period of your loan and on your CIBIL score. Generally the interest rate of the home loan varies from 8% to 12% P.A. Before opting for a home loan with any bank check first that the interest rate charged to you is according to the MCLR.
LTV (Loan to Value) Ratio: It is the value ratio of your property. According to RBI for a property worth ₹ 3 million or less than that a bank can give up to 90% as the loan amount. The rest 10 % has to be given by your pocket no loan will be provided for that. Similarly for a property worth ₹ 3,000,000 to ₹ 7,500,000 the LTV ratio is 75% to 80%.
Processing Fees and Charges: Every home loan comes with some processing fees and charges. Generally the processing fees vary from 0.50% to 2% of your loan amount, so choose wisely as this is a non-refundable amount and should be paid from your pocket only.
So keeping these points in mind and all the types of home loan choose a home loan wisely according to your needs and requirements. There is one available for every need!