Types of Home Loan You Should Know About

People around the world rarely ever buy a house without the aid of any loan. This is primarily because home loan gives borrowers a chance to continue living a comfortable life. There are many types of housing loans that you can choose from while applying for a home loan. However, many prospective buyers fail to do a thorough research and learn about the types of home loans available. Choosing the right type of loan could help you get a good amount of savings on the fees, down payments and interest. And who wouldn’t want that, right?

These days, lenders offer several types of loans that proves to be beneficial to their customers. Such loans not only help buyers in funding their purchases, but also aid in other related activities. The different types of home loans available for people are as follows:

  1. Home Purchase Loan- The most common home loan available for people is the home purchase loan. The interest rates offered in this type of loan is of fixed or variable type. The interest rates range between 8.80% and 11.25%. Almost 85% of the house’s total cost can be loaned from the bank through home loan.
  2. Home Construction Loans- This type of housing loan is for people who are more interested in building or constructing their own house instead of buying one that’s ready to move in. The process for approval here is different than that of home purchase loan. The cost of the plot is also considered along with the rough estimate of the construction cost. One clause in this type of housing loan is that the plot must have been bought within the year for its cost to be included in the total loan amount.
  3. Loan for Home Extension or Expansion- These types of home loans are also provided to cover construction cost, which is spent while expanding the space of the house or constructing additional areas like a new floor, room, bathroom or balcony.
  4. Home improvement loans- This type of housing loan covers the expenses of minor improvements and renovation works that take place in the house. Repair works like plumbing, electric rewiring, painting and other internal and external renovations are covered under this type of loan.
  5. Land purchase loans- This type of loan is offered for people who wish to purchase land of their own, instead of a house. Just like home purchase loans, about 85% of the land’s total cost can be covered under this type of housing loan.
  6. NRI Home Loans- This type of home loan is specially designed for the benefit of the NRIs who wish to purchase a property in the country. The approval process for this type of loan is different from all the other loans.

You can choose which type of loan to opt for according to the situation you are in and the benefits you could receive from them. Making the right choice could help you save a considerable amount that can prove to be helpful in the long run.

Author: Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IITs and IISc. She holds 2 patents and over 20 publications in her name. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.