Before applying for a home loan, it’s important to know the different types available. This helps you compare options and choose the one that best fits your needs. Let’s look at the types of home loans you can choose from.
The Basic or Standard Home Loan is the most common type of home loanIt is used to purchase a new, under construction and resale residential property. This loan is simple and perfect for people who want to buy a home that is ready to move into.
Loan Amount: Up to 80-90% of the property value.
Tenure: Typically up to 30 years.
Interest Rate: Available in both fixed and floating rates.
Eligibility: Based on income, credit score, employment stability, and property value.
Flexibility: Suitable for salaried and self-employed individuals.
Affordable EMIs: Due to longer tenure options.
Tax Benefits: Under Section 80C and 24(b) of the Income Tax Act.
A Home Construction Loan is for people who want to build a house on a plot of land they already own or plan to buy. In this type of loan, the lender will disburse the loan amount by looking at your progress on the construction, which means phase wise manners not at one go.
Loan Amount: Up to 90% of the property value.
Tenure: Generally up to 30 years.
Disbursement: In phases, based on the progress of construction.
Interest Rate: Affordable interest rate.
A Home Improvement Loan is for fixing, renovating, or upgrading your current home. It’s perfect for homeowners who want to improve their living space.
Loan Amount: Up to 80-90% of the estimated renovation cost.
Tenure: Typically up to 15 years.
Interest Rate: Varies lender to lender.
Eligibility: Based on income, credit score, and property value.
Upgrade Your Home: Without putting a lot of pressure on your finances.
Tax Benefits: Under Section 24(b) for interest paid on the loan.
A Land or Plot Purchase Loan is for people who want to buy a piece of land to build a house later. This loan helps you purchase a plot for your future home.
Banks will only give a loan if you plan to build a home on the plot within a certain time. If you buy the plot to sell it later for a profit, you won’t get a loan, and you won’t get any tax benefits.
Loan Amount: Up to 70-80% of the plot value.
Tenure: Generally up to 15 years.
Interest Rate: Generally higher than home loan.
Eligibility: Based on income, credit score, and plot location.
A Balance Transfer Loan lets you move your existing home loan to a new lender to get better interest rates or terms. It’s a good option if you want to lower your EMI payments or get better services.
Loan Amount: Outstanding principal balance of your existing loan.
Tenure: Can be extended or retained based on new lender terms.
Interest Rate: Lower rates compared to your current loan.
Eligibility: Based on repayment track record and existing loan terms.
Lower Interest Rates: Reduces overall interest burden.
Flexible Terms: Option to extend tenure or adjust EMIs.
Additional Top-Up Loan: Possible based on eligibility.
The Pradhan Mantri Awas Yojana (PMAY) Home Loan is a government program that helps provide affordable housing for poor people in cities and villages. It gives interest subsidies to those who qualify.
Loan Amount: Varies based on income group (EWS, LIG, MIG-I, MIG-II).
Tenure: Up to 20 years.
Interest Rate: Subsidized rates with interest subsidy up to 6.5%.
Eligibility: Based on household income, property size, and location.
Benefits:
Interest Subsidy: Reduces the overall cost of the loan.
Affordable Housing: Promotes home ownership among lower and middle-income groups.
Government Support: Backed by the central government.
A Top-Up Home Loan lets you borrow extra money on top of your current home loan. You can use this money for things like home repairs, education, medical bills, or paying off other debts.
Key Features:
Loan Amount: Based on existing loan repayment history and property value.
Tenure: Same as the existing home loan or can be extended.
Interest Rate: Slightly higher than the current home loan rate.
Eligibility: Good repayment track record and sufficient property value.
Additional Funds: Without the need for a separate loan application.
Flexible Use: Funds can be used for various personal or home-related needs.
Tax Benefits: Possible if used for home renovation or construction.
| Types of Home Loans |
|---|
| Basic or Standard Home Loan |
| Home Construction Loan |
| Home Improvement Loan |
| Land or Plot Purchase Loan |
| Balance Transfer Loan |
| PMAY Home Loan |
| Top-Up Home Loan |
Choosing the right home loan is important for a smooth and easy home buying or renovation process. Knowing the different types of home loans in India helps you pick the best one for your needs and finances. Whether you’re buying a new home, building one, fixing up your current house, or looking for better loan terms, there’s a loan option for you.
How can EazyBankLoan help you in taking a loan? We understand the process of procuring a loan can be stressful. That is why we take care of your Loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.
Check the details here at EazyBankLoan
Need help? Reach out at support@eazybankloan.com
A home loan is a financial product that allows individuals to borrow money from a lender to purchase, construct, or renovate a residential property. The loan is repaid in monthly installments over a specified tenure.
A fixed interest rate remains constant throughout the loan tenure, while a floating interest rate can change based on market conditions.
The Pradhan Mantri Awas Yojana (PMAY) scheme is a government initiative to provide affordable housing to the urban and rural poor with interest subsidies on home loans.
A top-up home loan allows you to borrow additional funds over and above your existing home loan, which can be used for various purposes like renovation, education, or medical expenses.
You can improve your home loan eligibility by increasing your income, paying off existing debts, improving your credit score, opting for a longer loan tenure, including a co-applicant, choosing the right property, and saving for a higher down payment.
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