In terms of acquiring a new property or a house, getting a Home Loan in India is one of the most important and widely availed modes of finance. Majority of public and private banks offer Home Loans at attractive rates of interest which makes the dream of an individual or a family to reside into their own home a reality.
A wide range of financial products is available at the disposal of the prospective homeowners in the form of loans and repayments that are tailored and structured according to the exact and highly specific requirements of the buyer. This is made possible thanks to the intense competition among major banks which has fuelled them to put in their best foot forward and attract the attention of the home buyers.
Since the overall real estate market is somewhat stagnant since the past few years and is forecasted to remain in somewhat that same exact state for the foreseeable future, it makes sense for all banks to offer multiple beneficial schemes and offers for the customer to start investing in their dream home at a lucrative and flexible interest rate.
Usually, Home Loans are broadly classified into seven categories which are explained below in detail so as to obtain a better understanding on their utility:
It is only logical on our part to put this point at the very beginning since this is considered to be one of the most popular types of Home Loans. In this case, two individuals, a buyer and a seller (usually another individual or a builder/developer) participate in a transaction to buy and sell the house/flat respectively.
Many individuals/families do not opt for ready possession home and are rather interested in designing and construction of a house as per their preference or need. In this case, the individual/ family could hire an architect or a small scale developer/ contractor to prepare the layout and then zero in on the approximate cost which will be required to construct the house. This estimate along with all necessary documentation is submitted to the banks along with an application to get approval for the loan.
As the name of this loan suggests, it is usually availed when oneself is looking at acquiring just the land without any physical structure erected on it. The Land Loan is especially popular in rural or semi-urban areas where land is purchased first and as and when the landowner wants, can construct the house as per his convenience and availability of finances. It is worth noting that the bank will offer close to 80% to 85% of the property value as a loan when the purchase is to be made.
Owners who are already living in their existing accommodation that is either old and hence requires repairs or in case if they want to add an extra room, such as a kitchen or an additional bedroom, this loan will be applicable. It is comparatively much easier to get this loan approved since the finance required to complete such an exercise is comparatively on the lower side.
In certain cases, it is possible that the homeowner who has a pre-existing Home Loan to their name wants to shift/move to a new place, so at that time they can carry the existing loan to the new property. Here the individual in question borrowing the loan will not need to pay back the previous Home Loan. In spite of the ease in getting approval for a conversion loan from the bank, it remains quite expensive for the borrower.
Synonymous to its name this loan is availed to pay the stamp duty applicable while purchasing a home or a property. It is not as widely availed as compared to the above-mentioned loans.
It is usually availed by NRIs and they have to undergo rigorous due diligence and a comparatively complicated procedure to obtain their Home Loans.
Other many rarely availed loans include Bridge Loans which are usually not available for long terms and are availed by pre-existing homeowners that are planning to purchase another property. Here the property is kept mortgaged with the bank till the owner finds a new buyer for that house and another type of loan is Transfer of Balance Loan where the buyer can switch banks which usually happen when the other bank offers better and many attractive benefits and interest rates as compared to the previous bank.
The person of interest who will be buying the home or land should keep in mind that as per their needs, the procedure to obtain the Home Loan will also change. Thus it is advisable that they should identify the loan which will be most suitable for their requirement and then carry out thorough due diligence and research on how to ensure efficient and error-free documentation so as to obtain speedy loan approval from the baking institution in question.
Also Read: Types of Home Loans Offered by SBI
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