In India, buying a new home is a lifetime objective of many. People wish to own their homes as per their financial capabilities and typically save money from the early period in their career. However, buying a home or a plot involves a vast amount of funds and can drain out your savings. Hence, you can use the financial help offered by various banks/NBFCs to fulfil the dream of your own home. Interestingly, there are multiple types of home loans that can cater to different needs, which are:
Loans for plot purchase
Many banks/NBFCs provide loans to purchase vacant lands or plots which you can use to construct houses or use for future resale. However, you can avail tax benefits only after there is a commencement of house construction on the plot. You can get competitive interest rates with tenure of 15-20 years for plot loans if you look for the best financial institution.
Loans for purchase of a home
In comparison to the plot loans mentioned above, the home loans provide financing options to those who have decided to purchase an already constructed building/flat or an establishment. You can get tax benefits for the loan EMI; you pay to the lending institution. Additionally, you can use a home loan eligibility calculator to determine the interest rates, tenure and other details about repayment. The rate of interest can range from 8% to 12% depending on the lenders and other eligibility factors.
Loans for construction of a house
If you already own a vacant piece of land and wish to construct a residential building on it, you can leverage the loans for the same. You can also include plot cost into your loan amount, but the land must have been purchased within a year to avail the same. You can have the loans disbursed in one go or multiple instalments. One can have a discussion with their financial partner or relationship office for the details about this loan.
Loans for extension or expansion
Not many know that you can avail finances even for the development of your residential property, i.e. an additional bedroom or a new balcony. There are many big banks/NBFCs which provide such loans for the benefit of the borrowers.
Although expensive, these loans are used in situations where you already have an existing mortgage and want to avail loans for the purchase of a new home.
Balance transfer loans are conventional and used in instances where you wish to move to a different bank/NBFC for better interest rates and convenience in the repayment phase.
NRI home loans are customized for non-residential Indians, and their process is entirely different than those of standard home loans.
Apart from the loan types mentioned above, there are also loans for stamp duty costs, renovation, and so on. You need to have an insightful discussion with financial institutions to identify the loan type as per your requirements so that you can plan your finances accordingly.