Home loans help you realise your dream of owning a house without breaking your savings and investments or impacting your other important financial goals such as children’s higher education and retirement. Low interest rates, flexible repayment tenure of up to 30 years, annual tax benefits, PMAY subsidy of up to Rs. 2.67 lakh, balance transfer facility and top-up loan facility. Housing loans can also be availed by those who need funds to construct a house or expand, repair and renovate an existing property.
As the home loan market is crowded, finding the best home loan offer can be challenging. At RapidLoans, we help you compare, select and apply for the best home loan rates from India’s top Banks and Housing Finance Companies (HFCs). We provide comprehensive information on home loans along with the convenience to apply for home loan online and get an instant conditional e-Approval in just a few steps.
Types Of Home Loans
Banks and Housing Finance Companies (HFCs) offer home loans for different purposes. So before applying for any type of home loan, assess your requirements in order to get a suitable home loan scheme. Some of the types of home loans available are as follows:
- Home Purchase Loan: It is the most common type of home loan availed usually to buy ready-to-move-in properties, under construction properties and pre-owned homes/resale properties. As per RBI guidelines, lenders can offer loan-to-value (LTV) ratio of up to 75-90% of the property value.
- Composite Loan: It is a perfect financing solution for individuals who want to buy a plot of land either for investment or for building a house. In this type of home loan, the first disbursement is made towards the purchase of plot. The subsequent payments depend on the stages of construction of the house.
- Home Construction Loan: This type of home loan is available for individuals who want funds for the construction of a house. The loan is granted only if you own a plot of land and plan to construct a house on it. Just as in composite loan, here too the disbursement depends on the stages of construction of the house.
- Home Improvement Loan: The can be availed to fund home renovation and home repairing expenses of the existing house. The interest rate for this loan is same as that for a regular home loan. However, its loan tenure is shorter than the regular home loan.
- Home Extension Loan: It is for those who require funds to add more space to their abode. Under this loan type, financial institutions usually lend 75-90% of the construction estimate, depending on the loan amount and LTV ratio.
- Bridge Loan: It is a short-term home loan and is suitable for individuals who wish to buy a new house with the sale proceeds of the existing home. The loan helps in covering the gap between the purchase of a new house and the sale of an existing house.
- Interest Saver Loan: It is similar to home loan overdraft facility. In this, the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI amount is used as prepayment towards the loan, thus, saving on the interest amount.
- Step Up Loan: Yet another type of home loan in which borrowers pay lower EMIs during the initial years of the loan tenure. However, there is a provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who just start their career.