For many, purchasing a home is one of the vital milestones of life. However, with the rising real estate prices, it is tough to own a home through your investments or savings. Here is where a home loan can help you meet your dream of purchasing a home. But note that there are different types of home loan designed to meet different purposes, which often comes with different home loan eligibility criteria. Thus, you should apply for a home loan after proper scrutiny of which type matches with your needs best. Also, ensure to check the eligibility requirements. Doing so will help you make the most of the home loan availed.
Here is a detailed look at different types of home loan in India:
- Plot home loan
Plot home loan helps you to purchase a plot of land for construction of your own residential house. However, the LTV ratio and the repayment tenure on such a type by few lenders may be slightly lower than their regular counterpart.
- Construction home loan
Construction home loan is available to you if you hold a plot and require some funding to construct your residential property on the piece of land. While LTV ratio, home loan interest rate, repayment tenure on it is usually the same as regular housing loan, some lenders may offer lower loan tenures for construction loans.
- Rural home loan
This loan is a special offering that can be available to you if you are from rural regions to meet your unique needs of buying a home.
- Affordable home loan
Affordable home loans are particularly aimed to meet housing needs of low-income groups.
- Home improvement or renovation loan
Home improvement or renovation loan is offered if you want to either repair or renovate your existing home. Many lenders provide this loan just for shorter tenures than its regular counterpart.
- Bridge home loan
Bridge home loan aims at meeting your aspiration of enhancing your existing houses into bigger sized homes at better locations. This loan helps to meet the short-term liquidity crunch that you may witness between the sale of your existing house and purchase of the new one. Maximum loan tenure for this loan is two years in case of a ready property. However, if your property is under construction, the highest tenure is of up to five years.
- NRI home loan
NRI home loan is provided to you if you are a PIO, NRI or OCI to finance your purchase or construction needs of your housing property.
- Special home loan for government employees
Many lenders offer different categories of home loan if you are a government or PSU employee at concessional housing interest rate and better conditions. As government jobs are considered stable, documents required for home loan application processing may be minimal.
Conclusion
The kind of home loan you should avail solely depends upon your requirement. But you must note that you can only receive funding of up to 90 percent of the actual property cost. This means, you must accumulate 10 percent of the remaining amount from your own pocket. Once done, choose an appropriate loan type, lender and use the home loan EMI calculator to figure out the apt EMI and tenure as per your cash inflow and capacity to repay.
