Types of Home loans and things to consider before buying Home loan

Building a home is a dream for everyone and home loans helps you to make your dreams comes to real. A person may need a loan for various reasons like purchasing a land, buying / building a home, extending the home, renovating the home, etc. Home loan meets all these requirements. Home loans interests are lesser than other loans.

Types of Home Loan

1. Land purchase loan
   For purchasing land only for building a home in future.

2. Home purchase loan
   This loan is for ready to move properties and under-construction properties.

3. Home construction loan
   This is a short term loan to start your home construction. Its usually have a high-interest rate.

4. Home extension loan
   This loan is provided for extending a room or building additional floors based on your requirements.

5. Home improvement loan
   Its called Home improvement loan or Renovation loan. The purpose of this loan is for doing renovation works at the home.

6. Home loan balance transfer
   Transfer loan from one lender to another lender. If you are not satisfied with the services with a lender or paying high-interest rates you can transfer the loan to another lender.

7. Composite loan
   For purchasing land and start constructing immediately. Its the combination of Land purchase loan and construction loan.
8. NRI home loan.

This is the home loan for Non Residential Indians who wants to buy a home in India.

Interest Rate.

1. Fixed Interest Rate.
   Rate of interest will be fixed for the entire tenure and you will be paying the same EMI until the loan is completed.

2. Floating Interest Rate.
   Fluctuation in the interest rate as per the RBI guidelines and there will be changes in EMI when changes in Interest rate.

Eligibility Criteria for obtaining home loan

1. Age
2. Income
3. Stability in job
4. Financial history
5. Credit score

Things to consider before buying a home loan.

1. Plan how much is required and buy loan only the required amount.
2. Tenure – Plan how long you are going to repay the loan.
3. Decide which type of interest rate should be chosen whether Fixed Interest rate or Floating rate.
4. Part-payment can be done to reduce the EMI or reduce the tenure of the loan.
5. If you are a regular taxpayer as per 80C you can avail tax deduction of 1.5L from the principle. As per 24b up to 2 lakhs can be availed in the interest rate.
6. For resale properties bank won’t provide 80%-85% loan on seller’s quote. Bank has certain criteria and based on market value, the bank will provide the loan.