Applying for a home loan is a great way to fund the purchase of your dream home. But, to have a pleasant borrowing experience, you must apply for the right type of loan. Read on to know more about the different types of home loans available in India.
Most people in India accomplish their dream of being a homeowner by availing a home loan. Over the past few years, especially with the launch of the PMAY (Pradhan Mantri Awas Yojana) scheme, the demand for home loans in India has increased significantly. Many financial organisations, including government banks and Non-Banking Financial Companies (NBFCs) offer a variety of loans to suit the different purposes of the borrowers at a competitive interest rate.
If you are a first-time borrower, you must do your due diligence to know about the different types of home loans available in the market. Each of these loans serve a specific purpose and choosing the right type of loan is vital to have a pleasant borrowing experience.
Some of the most common types of home loans you can borrow, include.
Home Loan
The home loan or home purchase loan is the most common type of loan borrowed in India. As the name suggests, this type of loan is specifically meant for buying a new flat or an under-construction property.
You can apply for a home loan with the lender of your choice. However, before you submit your application, it is advisable to compare the offers and check if you meet the lender-specific eligibility requirements. Generally, the lenders approve up to 80% of the property value as home loan and offer flexible repayment terms so that you can easily repay the amount.
Based on your repayment capacity, you can choose the loan tenure. However, most reputable lenders offer home loans for a maximum of 30 years. Another important thing to remember while applying for a home loan is to choose a lender that is authorised to provide your PMAY benefits. This will help you be eligible for getting the PMAY subsidy benefit.
Plot Loan
The plot for land purchase loan is a type of loan wherein you can avail a credit to build a home on the piece of land you own or buy a piece of land where you can construct your dream home. Just like the home purchase loan, plot loan has a simple eligibility requirement, which is listed below:
- You must be aged between 21-65 years at the time of applying for the loan
- You must an Indian citizen
- You must be salaried or self-employed with a regular income source
- You can apply for a joint plot loan with an earning member of the family as a co-applicant. The co-borrower can be your spouse, parent or sibling
Home Extension Loan
At some point, you may want to add an additional room to your existing house or build a new bathroom as your family grows. For this purpose, you can avail a home extension loan from any lender of your choice. Getting a home extension loan is a much better choice than applying for a personal loan as the interest rates are much more affordable. Also, if you have an existing relationship with the lender, getting this loan approved would be easy and may require minimal or zero documentation as the lender will already have your details.
Apart from the above-mentioned home loan types, you can also avail home extension loan and top-up loan. Now that you are aware of the different types of loan available, it is imperative that you take your time to know about each of these loan types and their features so that you can apply for the right loan.