Home Loans are one of the most popularly taken loans. A home loan enables you to have a property under your name. When we talk about home loans, the concept of borrowing money from a bank/ NBFC to purchase a home comes to mind. But do you know there is more than one type of housing loan? Whether you want to buy a piece of land, get construction done on an already-owned piece of land, or make improvements to your current residence, there is a separate kind of home loan for all these needs and more. You can apply for a housing loan to fulfil different property-related wants. If you wish to get an insight into the various types of home loans available in the market today, keep reading.
What is a home loan?
Many banks and non-banking financial institutions provide loans to people to carry out purchases related to property. The property involved is often kept as a mortgage till the time the borrower pays off the debt. With a market full of lenders, you will find many options to get a home loan. The eligibility criteria and documents required by most lenders to get a house loan are mentioned below.
Eligibility Criteria for applying for a home loan
- The applicant must be between the age of 23 to 62 years (the age may vary from lender to lender)
- The CIBIL score of the borrower must be 750 or higher.
- The applicant must have at least three years of work experience if they are a salaried employee or five years for self-employed individuals.
- The applicant must fulfil the minimum income criteria set by the lender.
Documents Required to apply for a home loan.
- KYC documents such as Aadhaar, passport, driving license etc.
- Salary slips for the previous two months
- Banks statements of the last six months for self-employed applicants and three months for salaried applicants
- Copy of the employee ID card (if applicable)
- Proof of business for the previous five years (for self-employed individuals)
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Types of Home Loans
Below mentioned is the list of different types of housing loans:
Home Purchase Loan
A home purchase loan is a loan that a bank or NBFC provides to the borrower to purchase their desired home. Most lenders offer 80-85% of the property amount as loans to the borrowers. This loan enables you to own the house of your dreams.
Plot Purchase Loan
This home loan provides you with financial assistance to purchase land on which you can build a home. This loan enables you to buy property, and lenders provide you up to 70-75% of the property amount on it. However, the interest rate on this kind of loan could be slightly higher than a regular home loan.
Home Loan for NRIs
These days NRIs who wish to own property in India can get an instant home loan too. Banks/ NBFCs offer a separate loan for NRIs to purchase a home. This kind of loan is similar to a regular home loan, but you can expect more comprehensive paperwork for it. To be eligible for this loan, the NRI (Non-residential Indian) or POI (Person of Indian Origin) should have at least one year of work experience abroad and proof of being NRI or proof of their Indian origin.
Joint Home Loan
If you wish to get a joint home loan with your spouse or any relative to share the responsibility of the loan with them, this is the loan for you. As the name suggests, a joint home loan is given to more than one person with a shared responsibility to repay the debt. This loan is popularly opted for by family members.
Home Construction Loan
A home construction loan enables you to borrow money from banks or non-banking financial institutions for the purpose of the construction of a home. This housing loan is suitable for people who already own a piece of land but need funds to construct a building on it.
Home Extension Loan
As your family expands, you need more space for everyone to live comfortably in the house. Suppose you live in a society that has a garden right outside your home, and it is providing you with permission to extend your place in that garden area. You will need funds to make the extension possible, and any construction business comes with heavy prices. The good news is with the help of a home extension loan, and you can carry out the extension of your house successfully and give your children the space they need to grow.
Balance Transfer Home Loan
Suppose you have an existing home loan, but you believe it is not the best home loan for you as you have come across loans with a lower interest rate in the market. Well, in this scenario, you can request a home loan balance transfer from your current lender and shift to a new lender. Even a slight difference in the interest rate can help you save a great deal in the long run. A home loan balance transfer allows you to get the best deal on your home loan.
Home Improvement Loan
With the introduction of modern designs, and people willing to spend tons on getting the most pleasing furnishing for their homes, home renovations have become relatively expensive. For most people, homes are the places they spend most of their time in, so it is fair to want a space that provides the utmost comfort and convenience. With a home improvement loan, you can borrow money to invest in the home renovation of your liking. Whether you want to upgrade your bedroom or enjoy a modular kitchen, it can be done with the help of a home improvement loan.
You have the option to apply for a housing loan not only when you want to purchase your dream house but for other construction-related expenses for your home as well. You can also opt for a balance transfer on your existing loan if you find a better deal somewhere else. The eligibility criteria for the application of any kind of home loan are simple and only require you to submit a few necessary documents.