Getting a home is everyone’s dream and it gives a first time home buyer extreme joy when banks are ready to help with multiple flexible home loans. You no longer no need to compromise on your dream of owning a home which you can call yours. There are various types of home loan options offered by banks and housing finance companies. In this article, we will talk about the types of home loans one can avail with ease.
Different Types of Home Loans
Regular home loans
The most common type of loan is the regular home loan. It is taken to purchase a flat, a bungalow/villa or any other property that is either newly constructed or is under construction. You can also purchase a pre-existing property with the help of a regular home loan. As mentioned earlier, this is one of the most availed home loans by customers, especially if someone wishes to buy a residential property. The interest rate on this type of loan is generally fixed or floating and is determined before the loan is disbursed.
Home construction loans
If pre-constructed is not in your wishlist and you prefer to customize it to your own specifications, you can take out a home construction loan. The prerequisite for this loan is you need to own a plot of land, which you can also get by taking a different type of house loan – a land purchase loan.
If you want the plot cost to be included in the home construction loan, you need to make sure that the land is purchased within a year. The loan amount you are eligible to get is determined on the basis of the cost of the plot, and you also need to provide a rough estimate of the overall house construction cost. These types of loans are typically dispersed in a single lump sum or in installments as construction proceeds.
Land purchase loans
As mentioned in the above point, a land purchase loan is also one of the important types of loans if you are looking for how to buy a house with bank loans. This kind of loan is offered by most banks/home loan lenders and provides you with a flexible option of purchasing a plot of land on which you can construct your home. You can purchase the land with the help of a loan when the property rates are low, and construction can be carried out whenever you have the funds available. The land can also be purchased solely for investment purposes and sold later for a profit.
Home extension or expansion loans
This type of loan is taken if you want to make any renovations to your home’s present structure. You can apply for special types of housing finance for this purpose known as a home extension or expansion loans. These types of loan allow you to construct new rooms, make alterations to their size or even add floors on your existing property, provided you have the documents to mandate this new construction. You can also convert two flats you own into a furnished single large flat, or construct a duplex and make other such alterations with this type of loan.
Home improvement or remodelling loans
This might sound like a home extension or expansion loan but is a bit different from them. Every few years, usually, your house needs a repaint. You may also have to fix a leaky ceiling or hide those hanging wires that make the house look weird. The costs of these repairs pile up to become a huge amount and are usually higher than anticipated. A home improvement or remodelling loan comes into the scene when you need money for such things; it is the right type of house loan to help you cover these expenses. Home improvement loans can be taken to renovate the interiors which can include repairing the tiles, upgrading the electrical system or even modernising your home as per your needs.
Home conversion loans
If you have availed a home loan, but now you want to sell the home and purchase a new one, you can take a different type of house loan called home conversion loan. With the help of this loan, you can purchase a new house without looking for a new lender. You can just transfer the existing loan to the new house and continue to pay it in a normal way. The funds for the new house can be easily arranged by selling the existing house. In this way, you won’t have to worry about repaying the previous home loan.
Government Schemes that can help you get a new home
You can also try some Government initiated schemes such as Pradhan Mantri Awas Yojana also known as PMAY to get a new home. The Pradhan Mantri Awas Yojana is a Government of India initiative which aims at providing affordable housing to all by the year 2022. The interest rate for the PMAY scheme starts at 6.50% p.a. and can be availed for a tenure of up to 20 years. Under the PMAY Scheme, the subsidy interest rate is 6.50% p.a. on a housing loan for the term of 20 years to all the beneficiaries.
On a closing note
The type of home loan you will go for depends entirely on your needs and you can choose anyone from the list given above. One important thing to keep in mind is that you can get maximum finance of up to 85% of the actual market value of the property. This means that the remaining 15% you will have to provide as the down payment. Since these are long-tenure loans, they don’t burn a hole in your pocket and you can comfortably repay them in easy and affordable monthly EMIs.