9 Different Types of Home Loans Available in India 2024

Mar 5th 2024
Loan
9 Different Types of Home Loans Available in India 2024

Everyone wants to own a home at some point in their lives. Everyone aspires to own a home since it is seen as an indication of a settled life. Not everyone can purchase a home due to the escalating cost of real estate. For this reason, individuals apply for a home loan so they can fulfill their goals. A range of home loans are offered by banks and other financial organizations to accommodate the requirements of various applicants.

NBFCs, banks, and HFCs (housing finance firms) provide a variety of home loan options to meet the demands of their clients. To buy a house, or land, or to renovate, a person may choose to take out a home loan from one of the best home loan providers in India. Additionally, lenders provide top-up and balance transfer options for house loans, which are akin to add-on services meant to benefit clients.

To help you make an informed choice when applying, we have outlined the various types of home loans that are offered in India in this blog.

Below, we have highlighted 9 different types of home loans available in 2024.

1. Loan for New House:

You can utilize a new home loan to finance the purchase of a brand-new home or piece of real estate. The majority of lenders finance between 70% and 90% of the real property value. The interest rates may change based on your credit profile, but they typically begin at 8% per year. 

Repayment terms typically last up to 30 years. To obtain a better understanding of your financial situation, think about computing the house loan interest rate in advance.

2. Loan for Home Renovation:

Those who own a home but lack the funds to make renovations might apply for a home improvement loan. Repairing an old property, repainting walls, adding new light fixtures, extending the home, and other tasks are all examples of renovation. 

The loan operates as follows: The lender receives a cost estimate from the borrower for the work that will be done, and the lender will get a quote from the contractor to confirm the information provided. The contractor to whom the money is owed receives it at the rate of construction.

3. Home Extension Loan:

If a person wants to expand their property structurally in any way, a home expansion loan can come in handy. Banks and NBFCs will accept applications for home extension loans from any qualified individual or couple. 

As an addition to their current loan, borrowers who already have a home loan can obtain a house extension loan from the same lender. Loans for home extensions are less expensive and have lower processing fees. They also give borrowers tax advantages and are simple to get.

4. Home Loan Balance Transfer:

The ability to move your current home loan to a new home loan account at a lower interest rate is known as a home loan balance transfer. If you're unhappy with the prices and services offered by your current lender, you can apply for a home loan balance transfer.

5. Home Loan Top-Up:

If you already have a mortgage but need extra money for repairs or renovations, you might choose a home loan top-up. The best aspect is that there are no end-use restrictions on house loan top-ups, so you can utilize the money for any kind of financial need. It functions more like an interest-only personal loan.

6. Home Loan for NRIs:

Persons of Indian Origin (PIOs) and Non-residential Indians (NRIs) may also choose to take out a home loan to purchase a new property or make repairs to an existing one. Legal documentation attesting to the applicant's Indian heritage or NRI status is required. They should also have at least a year's worth of international work experience.

7. Loan for Home Construction:

A home construction loan is intended for those who choose to build their own home rather than purchase one that has already been built, as the name implies. Investkraft provides home construction loans based on the requirements and budgets of applicants. You can build your home with this loan and pay it back over a flexible 30-year term with total financial flexibility.

8. Land Purchase Loan:

For the purchase of land, several institutions provide loans. Buying land is a flexible choice; the buyer can keep the land as an investment or save money to build a house whenever his finances allow. Loans up to 85% of the land's worth are provided by lenders such as Investkraft.

9. Bridged Loans:

Short-term loans known as "bridged loans" are intended for current homeowners who want to buy a new home. It helps borrowers finance the purchase of a new home while they wait to find a buyer for their current residence. This kind of loan is often granted for less than two years and needs a new home to be mortgaged with a bank.

Home Loan Interest Rates in India 2024

Below are the interest rates for different types of home loans in India.

Type of Loan  Interest Rate (p.a.)
Home Loans 8% onwards
Home Construction Loan  9% onwards
Home Improvement Loan 8% onwards
Home Extension Loan 9% onwards
Plot Loan  10% onwards
NRI home loan 8% onwards
Home Loan Balance Transfer 8% onwards
Top-up Home Loan 8% onwards

 

Documents Required For Home Loan in India 2024

Not all home loan types demand the same set of paperwork. However, if they choose to pursue any kind of housing finance option, they may be required to provide these:

  • Proof of Address and Age 
  • filled-out application form with signature and photo 
  • documentation about income (salary slips, ITRs, etc.)

The extra paperwork needed for each of the many kinds of house loans is shown in the following table:

Type of Loan Documents Required
Home-Purchase Loan Documents of Property,
Existing Loan Documents,
Home-Construction Loan Property Related Documents,
Existing Loan Documents.
Home-Improvement | Renovation on Loan Original Property Ownership Documents,
Estimated Cost of Home Improvements,
Land-Purchase Loan Property Related Documents,
Existing Loan Documents,
NRI Home Loan Valid Work Permit,
Proof of Current Overseas Residence,
Copy of Passport and Visa,
General Power of Attorney,
Bridge Loan Existing Loan Documents,
Property Related Documents,

 

Eligibility Criteria of Home Loan

Please be aware that depending on the lender, different types of home loans may have different qualifying requirements. 

This is a tabular depiction of the fundamental parameters:

Specifications    Eligibility Requirement
Age of the applicant  18-65 years
CIBIL score  750 and above 
Work experience of salaried professionals Minimum 2 years
Business vintage (for self-employed individuals) Minimum 5 years
Minimum salary  Rs. 25,000
Nationality  Indian

 

Home Loan Application Procedure

The procedures to apply for a home loan are as follows. Do note that the documents required for home loans in India and the home loan eligibility criteria may differ from one lender to another. 

  • Step 1: Go to the mobile app or website of the lender.
  • Step 2: Type in some basic information, such as your name, date of birth, job information, etc.
  • Step 3: Finish the KYC verification process.
  • Step 4: Verify your eligibility for a loan. 
  • Step 5: Decide how much money and how long you want to borrow.

Be aware that there will be a thorough verification of documentation about the property, which may prolong the loan disbursal process.

The Conclusion

Prospective borrowers should thoroughly investigate the various kinds of house loans that are offered in India. This will assist them in choosing the choice that best fits their budget. Before choosing a lender, people ought to examine the interest rates and EMI alternatives offered by each one. Choose the option that best fits your ability to repay debt by downloading the Investkraft app and using the home loan EMI calculator.

FAQs

Q. What does a home loan amortization charge mean?

- A table that contains all the information about the house loan is called an amortization schedule. Each EMI payment's principal and interest components are listed. The home loan company provides such a graphic.

Q. How can I calculate the monthly EMI for a home loan?

- A home loan EMI calculator makes it simple for individuals to calculate their home loan EMIs. The EMI will appear on the screen following the entry of the loan amount, term, and interest rate.

Q. Which is better a home loan or a personal loan?

- You can take out more debt and pay it back gradually with a house loan. Lenders usually offer much smaller sums for personal loans because they are unsecured, which makes it challenging to buy a house with one. A personal loan also has a far shorter payback period.

Q. How a mortgage is different from a loan?

- Any type of financial agreement in which one party pledges to repay the other and receives a lump sum is called a "loan." One particular type of loan used to finance a property is a mortgage.

Q. Are property loans and home loans different?

- One kind of loan used to purchase a residential property, usually for personal use, is a home loan. Loans for buying and selling residential and commercial real estate, as well as loans for real estate investments, fall within the larger category of property loans. One particular type of property loan is a home loan.

 

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