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9 types of home loans you can avail in India

A housing loan is a set amount of money borrowed from banks or Housing Finance Companies (HFCs) to buy a home.  Home loan Interest rate, loan amount, loan term, monthly EMIs on house loans, and credit score are all important aspects to consider while you are looking for a home loan.

  1. Loan For Home Purchase

As the names suggest, this is the most common type of house loan used to purchase a new home. Home loans are provided from all major banks, including SBI, HDFC, ICICI, PNA, and Axis Bank.

The home loan will be for a minimum of 75-85 percent of the property’s value.

  1. Loan For Home Construction

Customers who are looking for funding to build a new house are often provided a home construction loan. The interest rates and application process are similar to that of any other type of house loan.

This loan can also be used to finish a home that is still under construction.

  1. Loan For Home Conversion

If a buyer has already taken out a home loan from a bank to purchase a home and is now looking for a higher loan amount to buy another home, they can apply for a home conversion loan. The previous loan’s remaining balance is transferred to the new loan.

This kind of loan is generally used by people who want to avoid having to pay off a previous or present loan. However, because these loans are intended for second homes, borrowers may be required to pay more home loan interest rates than new home loans, depending on the bank’s policy.

  1. Loan for home improvements

Home improvement loans are provided by banks to extend, repair, or modify a home that the borrower has previously acquired. The borrower might utilize the loan money to improve the outside or the inside of his or her home.

Some banks have a specific loan category for house improvements that they referred to as home extension loans. Home improvement loans are available from all of India’s major banks.

Approximately 80-90 percent of the work estimate is provided to you. 

  1. Loan again for the purchase of land

People who wanted to purchase land to build a home or for investment are using this kind of loan.

These loans are provided by all of India’s major banks. A land loan has a considerably shorter term than a residential loan, often ranging from 5 to 15 years. This implies that your EMI will be greater as well.

The loan-to-value ratio for a land loan is usually between 60% and 75%, and most banks have a maximum amount you may borrow. As a down payment, you’ll have to pay almost 30% to 35% of the whole amount. Most land loans have interest rates that are equivalent to housing loans.

  1. Loan For bridge

Individuals who want to sell their current house and purchase a new one might take full advantage of these special loans. This loan, as its title suggests, bridges the financial gap that occurs between buying a new home and selling the old one.

A bridge loan is a short-term loan that can be used to fund the purchase of a new home while the old one can be sold. Interest rates are slightly higher than regular home loan interest rates because this is a short-term loan.

You need to provide the bank with information about the new home to qualify for this loan. If you can’t get the money for your old house within six to twelve months of taking out this form of loan, you’ll have to pay it back.

  1. Balance transfer home loan

A balance transfer home loan allows purchasers to take full advantage of the market’s decreasing interest rates. Although the Reserve Bank of India demands that home loans with lower interest rate benefits be passed on to present customers, most Indian banks do not, making a balance transfer a decent alternative for borrowers.

Existing house loan customers can take advantage of a home loan lower interest rate by transferring their home loan to another bank. A home loan with a balance transfer eases the pressure on customers who already have a loan.

  1. Reverse mortgage loan

In India, this is a relatively new concept that seeks to provide financial support to senior citizens. Under reverse mortgage loans, the borrower pledges the property, and the bank calculates its current market value before issuing the loan amount to the borrower in monthly installments.

With each distributed payment, the borrower’s equity in the property reduces.

  1. NRI Home Loan

Non-Resident Indians take out such a type of home loan to build a new house or modify an old property in India. This loan has a maximum term of 30 years and can have a fixed or floating interest rate.

As a result, they are the most popular and sought-after house loan options available in India. These are excellent financing choices for anyone looking to purchase a home or property without depleting their financial resources.

However, before choosing a loan, examine the numerous home loan choices offered by lenders to get the best price. By visiting reputable third-party websites, you may compare various home loan programs. Also, before applying with any specific lender, be sure to check your home loan eligibility using the Home Loan Eligibility calculator.