Home loans – 7 types of loans you can choose from

Buying a home by taking on a loan is a huge fiscal responsibility that often lasts for over two decades. Borrowers can avail a principal loan amount that needs to be repaid in equated monthly instalments or EMIs over a specific tenure at a specific fixed or floating interest rate. It is therefore important for borrowers to consider their options before taking on this loan. Enabling borrowers to choose the right kind of home loan that suits their requirements, lenders (banks and housing finance companies) offer various kinds of home loans. Let’s take a look at the 7 types of home loans you can choose from.

The regular home loan: Also known as the home purchase loan, this is the most common of all housing loans. It is mostly opted by people who intend to purchase a flat or house which is either under-construction or ready-to-move-in.

The plot purchase loan: If you prefer to construct your house instead of purchasing one constructed by a builder, you can opt for a plot or land purchase loan. The plot can be used to build a bungalow, a villa or even a multi-storey building. Note that if you opt to build the latter, you need to obtain government permit for the number of storeys you can build.

The joint home loan: As the same suggests, this is a type of housing loan that has more than one borrower registered as the home owner. Such a loan is often taken by people looking to avail tax benefits and the onus of loan repayment falls on all lenders equally. Registering a woman or a senior citizen as the first applicant can help borrowers avail lower interest rates on home loans.

The home extension loan: Individuals looking to change the floor plan of their already existing home can opt for the home extension loan. Let’s say you wish to add a floor to your bungalow or increase or reduce rooms in your flat and you need money for the same. You can take a home extension loan to fund these requirements.

The home improvement loan: Do you need to repair a leaky ceilings, hanging wires or is it time to repaint your house? When your house needs renovations of these kinds, you can apply for home loan for home improvement. Pledging your house as collateral can help you avail this loan at lower interest rates.

The top-up home loan: Let’s say you have paid off a part of your home loan (meeting the lender’s minimum loan repayment requirement) and you need funds for some personal reasons. Instead of taking on a personal loan with a high interest rate, you can simply take on a top-up home loan at lower interest rates.

The balance transfer loan: A balance transfer loan allows a borrower to transfer his outstanding loan amount to a new lender offering a lower interest rate on his existing home loan. The balance transfer can be made anytime while one is repaying an existing home loan

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Created on Apr 16th 2019 02:09. Viewed 653 times.

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