Types of Home Loans Explained

Updated on: 17 Jan 2024 // 3 min read // Home Loans
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Taking a loan to purchase a home is the only option for most of us due to the exorbitant prices of homes today. Given the expense along with common misconceptions associated with loans, one ends up renting an apartment instead. Home ownership is better than renting an apartment and with a little bit of planning, owning a home is not out of reach. It gives you freedom, privacy, and most importantly, an identity.

Advantages of Home Ownership

Buying a home is a one-time investment and acts as security for your family for generations to come. Moreover, the rising real estate costs make it an appreciating asset which substantially adds to your net worth. It is a built-in savings account which helps build your wealth over time.

Once the Home Loan is paid up, you are the owner without any financial restraints. Meanwhile, residing in a rented property puts a huge dent in your monthly budget. The rent is subject to change per the landlord’s demands too and therefore can keep increasing. There is also the need to maintain a healthy relationship with the landlords, abide by their rules and so forth.

Getting a Home Loan

Opting for a Home Loan and paying EMIs (Equated monthly instalments) is a better idea than paying rent. A Home Loan enables you to buy your dream home and settle down with your family. Many people go for a lower rent than a higher EMI, however in the long run, when the loan is repaid, you will be a proud home owner and realize that it is your best asset.

Apart from enabling you to purchase a property, Home Loans have other attractive benefits too.

Home Loan Balance Transfer

Over the course of the mortgage payment, you may find that some other financial institution charges a lower interest rate for the same principal amount. Availing a Home Loan Balance Transfer option essentially allows you not to miss out on that saving by transferring your existing Home Loan to another institution. You then pay your remaining mortgage to the institution you transferred to at their interest rate instead of the higher one you were paying earlier.

Apply For a Home Loan

You can explore the option and Apply for a Home Loan Balance Transfer if you come across a better offer. Lower interest rates help save a substantial amount of money considering Home Loan repayments can extend for many years. MyMoneyMantra can help you find Home Loan Balance Transfer offers at different financial institutions to ensure that you pay the lowest interest possible on your loan.

Home Loan Top-up

A Home Loan Top-up allows you to avail additional financial assistance over and above the Home Loan taken. You can get up to 100% financing of the original sanctioned loan amount (this may vary per the lender’s requirement and eligibility of the borrower). This additional financial aid can be helpful in many ways like making changes to your home such as renovation, modification, and so forth.

Home Loan Top-up is a better choice than unsecured financing as it comes at low interest rate than unsecured loans.

Repayment ability of borrowers and their past track record of repayment are considered when Applying for a Home Loan Top-up.

Home Extension Loan

A growing family needs space to provide comfort to all members. A possible solution may be a Home Loan Extension Loan to construct or to modify your home in order to accommodate everyone at home comfortably.

These loans are for people looking to add another room or another floor to their home. Be it a garage, a study, or even a terrace garden; Home Extension Loans provide a person with the financial assistance required to make that addition to their home.

With different types of Home Loans serving different needs, one need not fear being burdened by mortgage. A dream home is something you deserve and have worked hard to achieve it.

Therefore you should consider all these options for repayment or renovation than to be content with a rented property. With a number of financial institutions offering good deals, getting a loan is almost as easy as repaying it.

Home Loan