In India, home loans are popular for three reasons. Firstly, home loan eligibility is the simplest of all loans. Secondly, home loan interest rates are much lower than other loans in India. Thirdly, home loans are quickly approved, and borrowers can get up to thirty years for repayment.
However, the benefits and features you get from a home loan depend on the type of loan you choose. This article contains information about the five different types of home loans borrowers can choose in India, so that you can select the right loan for your needs.
Home Purchase Loan
A home purchase loan is the simplest of all types of home loans. You can apply for this loan if you want to buy a fully-constructed or under-construction house. Alternatively, you can use the amount to book a bungalow, duplex, or flat. Home purchase loan eligibility is straightforward. Lenders want you to have a decent credit score and stable monthly income, and you are eligible to avail of the loan. Presently, the interest rate of home loans in India ranges between 9% and 11%.
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Home Construction Loan
You can apply for a home construction loan if you need money for constructing a house. However, the home construction loan eligibility states that you should possess the land in your name. Unlike a home purchase loan, where the money is disbursed as a lump sum on a loan approval, in the case of a home construction loan, the loan amount is paid in instalments, depending on the progress of construction.
Home Extension or Improvement Loan
At times, you may feel the need to increase your house’s capacity by adding a floor or room. You might also want to renovate your property. A home extension or home improvement loan can be the perfect bet for such situations. The interest rate and EMI of home extension loans in India are often lower than home purchase or home construction loans. The home extension loan eligibility states that you need to own a dispute-free property.
Residential Plot Loan
If you nurture the dream of constructing a house but do not want to spend a lump sum at one go, you can apply for a residential plot loan and seize the land at attractive prices. The eligibility of residential plot loan is similar to home loans. Residential plot home loan interest rates in India usually start from 8.35% and goes up to 10.45%.
NRI Home Loan
Indian lenders offer exclusive home loans to Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs). The eligibility criteria is almost similar to home loans for Indian citizens. The only extra requirement is that you should have a working experience of at least one year. You can use the funds to purchase or construct a house. Alternatively, you can use it to improve your existing property or extend it. The interest rate for NRI home loans in India ranges between 9.25% and 11.50%. The loan repayment period is usually 15 years.
As home loan eligibility is simple, you can conveniently select the best option depending on your needs. Compare the home loan interest rates offered by various lenders in India before choosing the best one.