10 Types of Home Loans You Must Know Of |
Posted: March 21, 2018 |
Before choosing a home loan, you should understand the different types of home loans that you can avail. Following are 10 different types of home loans to help you understand the most suitable home loan as per your requirements. Loan to buy a plot This is the first type of home loan, which is exclusively availed to buy a plot or land on which you would build your home in future. The interest rate on a loan to buy a land is similar to the home loan. The only difference is that you cannot claim tax deduction on the interest paid on such a loan, which provides fund to buy a plot. Home Loan This is another type of loan, which is taken to buy a new residential property or a resale home. It can be availed at fixed or floating interest rates. Generally, home loan lenders provide 80 percent of the market value. You can also claim deductions on interest paid on such a home loan. Loans for construction of home If you wish to build the home yourself, you can opt for a loan for construction of the house. This is another type of home loan, which helps you to provide funds after estimating the cost of construction and other aspects. The cost of land will be considered in the calculation of total price of the house. Generally, banks take this into consideration only if the land has been bought within a year. Home Improvement Loans If you already have a home and feel the need to renovate it, you can simply proceed with the renovation. If you are out of funds, then you can even avail for another type of home loan, which is home improvement loan. Any renovation in your home like painting, major repairs, electrical renovation etc. can be done. Home Expansion Loans If you are looking to expand your home by constructing an extra floor, room or a balcony and are out of funds, you can get home expansion loans for the same. Some banks may include home expansion loans in home improvement loans, whereas some banks have home expansion loans as another type of home loan. Home Conversion Loans If you have purchased a new house by availing a home loan, but now you are thinking to have a new home, you can choose home conversion loans. Under this type of loan, you can transfer the current loan to your new home. NRI Home Loans This home loan is only available to Non-Resident Indians. NRI home loans provide fund to buy a home in India. One can also avail deductions in income tax if they are earning in India as well. Stamp Duty Loans If you find it burdensome to pay the stamp duty on your property purchase, you can apply for a stamp duty loan. This type of loan is not popular in India. Balance Transfer Loan If you are not satisfied with the services of your current lender or your current lender is charging a high rate of interest, then you should opt for a balance transfer loan. In balance transfer loan, you can transfer the loan from one bank to another. Bridged Loan If you have a home and want to buy a new one, you can avail bridge home for a shorter duration of time until you sell your old house. When your old home is sold, you get the freedom of repayment of the loan. To avail bridged loan, you have to mortgage your new house with the lender. Banks not only provide home loans to buy new houses but for several other purposes related to home. So, before applying for home loan, you should be aware of the different types of home loans in India.
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