Have you been looking for ways to fulfill your housing dreams? Often people are found to put their dreams and expectations of a perfect home on hold because they do not seem to have the budget to enliven them. Fulfilling housing dreams can be expensive, and not everyone may have the financial fuel to achieve it. This is where a home loan can be of help! The demand for home loans has been on the rise. Housing loans grew by 18.3% between Nov 2018 and Nov 2019. Let us see how home loans can be an ideal way to fulfill your housing dreams.
A brief guide on a home loan
Housing loan or home loan is the capital borrowed by a financial institution by a borrower to meet his financial requirements of buying a house. The property for which the loan is sanctioned can either be personal or commercial. A home loan is a secured loan where the property of the borrower acts as collateral. The lending institution has full right to take away the property from the borrower and recover the outstanding amount by selling it. Now, let us look at the different types of home loans that an individual can avail based on their requirements.
Types of home loan
Home loans can be branched into seven categories based on the needs of an individual. Some of them have been mentioned below.
Land purchase loans
As the name suggests, land purchase loans are the loans borrowed by an individual from banking or non-banking financial institutions to buy a plot of land.
Home purchase loans
Any individual can avail a home purchase loan to buy a residential property. Financial institutions can sanction up to 85 percent of the market value of the residential property that the borrower is willing to buy.
Home construction loans
Home construction loans can be borrowed to construct homes on land or plot, which is owned or co-owned by the individual.
Home extension loans
Home extension loans can be used to extend the existing house of the individual.
Home improvement loans
Home improvements loans can be borrowed to give your home a renovation. The disbursed loan amount can be used for house repairs, painting walls, wiring, etc.
NRI home loans
NRI home loans are specially meant for non-residents of India, who want to buy a residential property in India.
Home conversion loans
Home conversion loans are for existing home loan borrowers, who want to switch to a different home loan within the same bank or NBFC.
Repayment of home loans
Home loans provide the borrowers with an option to repay the loan in equated monthly installments (EMIs). The EMI value can be calculated using the home loan interest calculator. This will help analyze finances before signing up for a home loan scheme.
These are a few basic things about home loans that you need to know before availing one. Select the home loan scheme that meets your requirements.