All You Need to Know About Home Loans

Housing is a fundamental need much like food and clothing. Having a home of one's own is a goal shared by almost all Indians. However, rising real estate costs have made homeownership a near-impossible goal. A housing loan, however, may be the solution. It's a simple rescue to the problem of how to pay for a property without burning your savings. A home loan improves your chances of being able to purchase the house of your dreams without having to drain your funds. 

Our guide will cover all you need to know about home loans in India, including the home loan types. So, read on.  

1. Financing for a Property Purchase

Land purchase loans provide a borrower with money for the acquisition of usable land or plots on which he/she can construct a dwelling. These loans may be used for either primary residence improvements or as an investment. To help people buy land or plots, lenders these days often lend up to 85 percent of the property value. 

2. Home Loan for a New House

A home-buying loan is among the most popular types of home loan credit.Offers of interest are either variable (depending on market conditions) or fixed (within a range, say, of 9% to 12%). Many financial institutions provide loans of up to 75% of the entire amount. 

3. Loans for New Home Construction

Loans for building a home may be obtained from financial institutions by those who want to build a residence on land that is already owned by them. Construction loans are not like conventional housing loans and neither is the application or approval process for them. Getting financing to build a house entails the following steps: 

• One year is the maximum time frame in which a borrower must purchase a property or a plot.
• Borrowers must estimate building costs to get a home loan in India. 

Only the estimated cost of building the home is considered if the cost of the site is not included in the loan amount. 

 4. Financing for Room Additions or Expansions to Your Current House

Getting a home loan is a good idea if you plan on adding more space to your current house by building a new room or floor. A house extension loan or home expansion loan is what's needed in this case. 

5. Getting a Loan for House Repairs and Remodeling

Home renovation loans are taken out by people who want to make changes to their houses but don't have the cash on hand to do so. A home improvement loan may be used to finance the renovation of one's dwelling. 

6. Refinancing Your Home for a Makeover

Pre-existing home loan borrowers who are now looking to relocate might utilize the funds from a home conversion loan to purchase a new residence. 

Additional Read: Home Loan Terminologies You Must be Aware Of 

7. Home Loans for Non-Resident Indians

Specialized NRI house loans make it possible for non-resident Indians to purchase real estate in India. While this home loan option is comparable to standard home loans, there is much more paperwork involved. 

8. Interim or Gap Financing

For current homeowners who want to expand their real estate holdings, bridge loans might be an excellent short-term financing option. To assist borrowers, acquire a new home before selling their current one is up for sale. 

If you need financial help but don't want to go into your savings, a house loan might be a brilliant option. Lenders may make it possible to buy a property by providing loans with manageable monthly payments and flexible repayment terms. But before you start the home loan application process, you should read some helpful hints that may make the application and repayment phases easier. 

With so much information accessible online, all you need is some time off to learn about your home loan alternatives before applying for one. The down payment, monthly installments, and repayment term are the three main components of various Home Loan types. If you take the time to investigate these aspects before applying for a loan, you'll be in a stronger position to choose a suitable home loan from a superior lender offering competitive interest rates. 

Additional Read: Tips on How to Pay your Home Loan Faster 

There are several Home Loan types available, and you can choose the one based on your requirements. In all types, the monthly EMIs shouldn't put too much of a strain on your budget, and you should be able to adjust them beforehand so that they don’t become burdensome. You must also plan for the regular outgoing cash flow that goes beyond the EMIs you choose to pay each month and save aside money for emergencies. You may choose to buy a property in whatever neighborhood you desire, but it's crucial that you have the money to repay the home loan. Prepayment or foreclosure of a home loan is never a bad idea. 

Further, one of the key Home Loan eligibility criteria is keeping your credit in good standing. With a CIBIL Score of 750 or above, borrowers have a greater chance of qualifying for the lowest home loan rates available. Also, the likelihood of a loan being approved and disbursed quickly increases significantly.

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