TYPES OF HOME LOAN
Depending upon the type of property being purchased and the amount of loan required, home loans are classified into the following different types.
- Home Purchase Loan
As the name Suggest, home purchase loans are given for purchasing a flats or a home. This is one of the most popular type of home loan and are availed by most home buyers. Almost all banks and Non-Banking Financial Corporations offer home purchase loans.
- Construction Loan
Construction Loan is offered to customers who want finance for the purpose of constructing their own house on their existing land/plot. Under this loan the land on which the construction has to be done should have been bought before availing the loan The formalities for construction loan are slightly different than those for regular home loans. The loan applicant have to get a construction estimate made from an architect which has to be given to the bank/NBFC and thereafter the financial institute evaluates and decides to sanction amount of the loan.
- Plot purchase plus construction Loan
As the name suggests this is the loan given to the borrower for the purchase of the land/plot along with the construction of a house on that piece of land. These loans are very similar to the construction loan; The only advantage is that under this type of home loan the bank give a loan for the purchase of the plot as well as for the construction of the house on it thereafter. You can also get a loan just for the purchase of land/plot.
- Home Extension/Renovation Loan
Home loans for extension or renovation of home are offered to those home loan borrowers who already have a house but are looking for further construction or renovation on their existing piece of property. For example, addition of an extra floor or flooring and painting etc.
- Construction linked Home Loan
These loans are specifically designed to finance under construction properties primarily builder’s flats, Under the ‘Construction Linked Payment Plan’, the bank disburses installments to the developer on your behalf for pre-decided construction milestones. Every time a certain level of slab is laid, the bank will release some percentage of the loan amount.
- Balance Transfer of Home Loan
Individuals can use the balance transfer option to transfer their home loan from one bank to another. Most people choose this option to avail better interest rates and other loan terms and conditions. This loan can also be availed if the borrower is looking for some additional funding over and above his existing home loan amount. The additional finance availed under this type of loan can be used for any purpose. The top up amount is usually priced at the same rate of interest as of home loan.