Like most people, you may also dream of your own home where you find peace at the end of a long and tiring day. Being able to buy a house is a huge investment especially while property prices in most cities of India are constantly increasing.
However, arranging funds for this huge investment is made a little simple by financial institutions. Most banks and non-banking financial companies (NBFCs) offer loans that enable you to buy your home. Financial institutions offer different types of housing loans that meet the different expectations and needs of individual borrowers.
Here are six types of housing loans commonly offered by financial institutions.
- Loan for purchasing a home
The common type of home loan offered by financial institutions is for the purchase of a new or pre-owned property. Lenders offer up to 80% of the value of the property price. The balance amount must be paid through your own resources and is known as the down payment. This type of loan is available at a fixed or floating rate of interest and is repayable in Equated Monthly Installments (EMIs).
- Renovation loan
Over the years, your home requires maintenance and may also need renovation. Undertaking a renovation project requires adequate funds. A renovation loan provides you with the money needed to complete the project without any difficulties. You may use the loan amount to carry out external renovation. Alternatively, the funds may be used to buy new furniture or undertake internal works as well.
- Home extension loan
You may need to add an additional room or build a garage to your home to meet the needs of your family. Financial institutions provide home extension loans to make alterations to your existing property or add more rooms. Most lenders offer customization of such loans to ensure it meets your personal needs.
- Balance transfer loan
You may choose this type of loan if you want to transfer your existing loan to another lender. The common reasons for such transfers are a lower rate of interest or improved customer services. When you choose to transfer your existing loan, you may reduce the loan tenure, enhance the borrowed amount, or reduce the EMI.
- Non-resident Indian (NRI) loan
These loans are specifically aimed to enable NRIs to buy properties in India. In most cases, the application procedure and requirements for NRI loans are different from regular loans disbursed to resident borrowers. Most lenders offer expert advisors who work with you to understand your requirements and personalize the NRI loan.
- Top up loan
Top up loans are available for existing borrowers and depend on the outstanding loan amount and tenure. You may be eligible for this loan if you have made timely payments of all the EMIs. Furthermore, you must have a positive credit history and an impeccable record on all other loans. The top up amount is subjected to certain terms and conditions. It is recommended you use an online home loan calculator to know the amount available as a top up loan.
Housing loans are common and offered by most financial institutions. There are different types of loans and it is important you understand your needs to choose the most appropriate product. For added convenience, you may apply for a loan online. This will reduce the paperwork and ensure the application is completed without any delays.