When we think of housing companies, the first thing that comes to mind is home loans. These loans help people buy their dream homes by providing financial support. But, housing finance companies offer many other types of loans apart from home loans. These loans help to serve different needs like business expansion, renovation, or even meeting urgent financial requirements.
In this blog, we will discuss some important loans that housing companies offer besides home loans. These loans can be helpful for individuals and businesses in different ways.
A loan against property is a type of secured loan where you can use your owned property as collateral to get funds. This loan can be taken against residential, commercial, or industrial properties. Many people use this loan for education expenses, medical emergencies, or expanding their business.
The loan amount depends on the market value of the property (Up to 80%).
The interest rates are lower compared to personal loans since it is a secured loan.
The repayment period is usually longer (15-20 years), making it easier to manage the loan.
If the borrower fails to repay, the lender has the right to sell the property to recover the loan amount.
A top-up loan is when you borrow extra money on top of your current home loan. If you already have a home loan and need additional funds, you can get a top-up loan instead of applying for a completely new loan. This makes it easier and quicker to get the extra money you need.
It is available only to those who have an active home loan with a good repayment track record.
The interest rate on top-up loans is usually lower than personal loans.
There are no restrictions on how you use the funds. You can use them for home renovation, medical expenses, or even a family trip.
Since this loan is given on top of the home loan, the tenure can be long, reducing the monthly EMI burden.
Housing finance companies give loans to help people buy commercial properties, such as shops, offices, showrooms, or warehouses. These loans are useful for business owners who need a physical space to run their business.
The loan amount depends on the value of the commercial property.
Interest rates are slightly higher than home loans but lower than unsecured business loans.
The repayment period is flexible, ranging from 5 to 15 years.
Some companies also provide loans for the renovation of commercial premises.
Lease rental discounting is a loan where property owners can borrow money based on the rent they will get from their tenants in the future. It’s a good option for landlords with commercial buildings who receive regular rent payments.
The loan is given based on the rent agreement between the owner and the tenant.
The loan amount is determined by the total expected rental income.
This is beneficial for those who need a lump sum amount for business expansion or personal use.
If the tenant stops paying rent, the loan borrower is still responsible for repaying the loan.
If you want to buy land instead of a ready house, housing finance companies offer plot purchase loans. These loans help people buy land to build on in the future.
The loan amount depends on the cost of the land and the borrower's income.
Many housing companies provide this loan only if the land is within municipal limits.
The loan tenure is shorter than a home loan, usually around 10-15 years.
Some banks also offer a combination of plot purchase loans with home construction loans.
Home improvement loans are for those who want to renovate or upgrade their existing house. Whether it is painting, flooring, or adding new rooms, this loan can cover all such expenses.
The interest rate is lower compared to personal loans.
The repayment period can be extended up to 15 years.
It is useful for those who want to enhance their home's value and living standards.
The loan is sanctioned based on the renovation cost estimate given by the borrower.
If someone wants to build their own house instead of buying one, they can get a home construction loan. This loan gives money in parts as the construction moves forward.
The loan amount depends on the estimated cost of construction.
The borrower has to submit the house plan and cost estimation to get approval.
The money is released in phases, ensuring that it is used only for construction purposes.
The tenure is similar to a home loan, usually ranging from 10 to 30 years.
A reverse mortgage loan is for older people who own a house but need extra money to cover their daily costs. Instead of selling their house, they can borrow money using their house as security, and they can still live in the house. The loan is paid back later when they move out or pass away.
The bank gives money to the homeowner in installments or as a lump sum.
The borrower does not have to repay the loan during their lifetime.
After the borrower passes away, the bank can sell the house to recover the loan amount.
This is a good financial option for retired individuals who do not have a regular income.
| Loan Type | Summary |
|---|---|
| Loan Against Property (LAP) | Secured loan using owned property as collateral, with lower interest rates and long repayment (15-20 years). |
| Top-Up Loans | Extra funds on top of an existing home loan, with lower interest rates and flexible use of funds. |
| Loans for Commercial Premises | Loans to purchase commercial properties like shops or offices, with flexible repayment periods (5-15 years). |
| Lease Rental Discounting (LRD) | Loan based on expected rental income, useful for landlords with commercial properties, but borrower remains liable for repayment. |
| Plot Purchase Loans | Loans for buying land to build on, with a shorter tenure (10-15 years) and eligibility based on land location. |
| Home Improvement Loans | Loans for home renovation with lower interest rates, flexible repayment (up to 15 years), and based on renovation estimates. |
| Home Construction Loans | Loans for building a house, with phased disbursement based on construction progress and a tenure of 10-30 years. |
| Reverse Mortgage Loans | For senior citizens to borrow money against their home, with repayment after moving out or passing away. |
Housing finance companies offer many types of loans, not just home loans. These loans help with different needs, like buying commercial properties, renovating homes, or handling urgent money problems. You can pick a loan that suits your needs and has manageable repayment terms. Before applying, it's important to compare loan options, check interest rates, and understand how the repayments work to make a good choice.
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A home loan is taken to buy or construct a house, whereas a loan against property is taken by pledging an existing property to get funds for various needs.
Usually, top-up loans are offered by the same bank where you have your home loan. However, some banks allow balance transfers along with a top-up loan.
The loan amount depends on the value of the commercial property and the borrower's financial profile. It can go up to 70-80% of the property's value.
No, lease rental discounting is usually offered for commercial properties where the owner has long-term tenants.
No, plot purchase loans are usually given for residential plots, not for agricultural land.
Senior citizens above 60 years who own a house can apply for a reverse mortgage loan.
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