Different Types of Home Loans Available in India

Introduction

For many, a home loan is not an easy deal to comprehend. With so many types of home loans floating in the Indian market, it does become quite imperative to know what type of loan you should avail. This blog shall help you understand the different types of home loans, the interest rates that go with them, documents required, and the application process. Let's make your home-buying journey just a little smoother.

 

Types of Home Loans

 

HOME LOAN

The amount one borrows for a home or housing loan is known as a mortgage. One can avail loans from banks and other lending institutions. The principal amount has to be repaid by the borrower with interest in Easy Monthly Instalments, EMI, for a specified time period ranging between 10 to 30 years, depending upon the kind of shelter loan availed.

You can also avail home loans for different utilities with India Shelter, such as:

 

HOME IMPROVEMENT LOAN

Every home needs maintenance to uplift the standard of living of the family living in that house. Every year new technologies are coming up to improve our living standard. It may be that an antique house needs some renovation to use these modern tools. Along with remodeling and repair, regular maintenance is also home improvement.

Home improvement loans are available to meet the huge expenses of all the renovation works. These loans are given, taking into consideration the estimated cost of the home improvement work that you wish to carry out. The lender will scrutinize the bid to ensure that the prices are reasonable before these loans are accepted. The amount is lent to you for that amount, which pays for the renovation. The lender may inspect the construction at periodic intervals before releasing the funds to make sure that actual work is in progress.

 

HOME CONSTRUCTION LOAN

The user opts for a home construction loan at such a time when he or she intends to construct their dream house for residential use. We offer home construction loans at India Shelter, which help our customers build a house of their own by providing financial support. We sanction easily and disburse quickly for the ease and convenience of the customers.

 

HOME PURCHASE LOAN

This is generally availed of by the borrowers for financing the purchase of a new home. It is very important to know the eligibility and the repaying capacity before entering into the process of Home Loan.

This would also determine the repayment capacity, based on factors such as total monthly income/ monthly expenses, and other factors like your spouse's income, assets, liabilities, etc.

 

HOME EXTENSION LOAN

If one has the space, they might decide to expand their current home rather than buying a new one. It is best suited as the choice for more affordable space expansion. The house addition will keep you away from the search for a new home, whether due to the need for office space, growing family, or study space.

While purchasing a new house is undoubtedly costlier, house extensions are still quite expensive. It is always better to have a clear idea of the total cost of the project before sanctioning your loan application. This will ensure that you borrow only the amount that you need to extend your home.

 

LOAN AGAINST PROPERTY

A  loan against property is a type of secured loan taken against an asset that is collateralized. This can be a home, a loan, or any of the other business property owned. The person lending the money holds the asset as collateral until the entire amount of the loan taken against the property is paid.

The interest rate for property-based loans is far lesser as compared to that of unsecured loans. Pick one of the best financiers like India Shelter for an entirely problem-free and economical  experience. Avail our services and enjoy a plethora of loan benefits and privileges.

In case you are a person who does not have proper documentation but is looking forward to getting a home loan, you can reach us through our website www.indiashelter.in or call us on our toll-free number 1800-572-8888. Our customer care executives are at your beck and call to assist all your home loan-related queries 24x7.

 

Interest Rates of Different Home Loans

Home loan interest rates also vary depending on the lender in India and the type of housing finance which is required; there are two main types of interest rates.

 

Fixed Rate Loans: The interest allowed under a fixed-rate loan allows the interest rate to be the same over the period taken. It gives stability and predictability in the EMI, which stands for Equated Monthly Installment. It is wise to consider this if your first priority is to find a bank with a fixed financial plan.

 

Loans with Variable Rates: Basically, this type of loan has an interest rate that is variable or floating, depending on the prevailing rates of the market. In other words, floating rate loans attract lower interest charges, as compared to fixed loans when one starts borrowing. These interest charges are variable and may change in the future. Opt for floating rate loans if you anticipate a reduction in the interest rates, or else if you can adapt to high-interest rates.

Slash your home loan interest rate! Discover key strategies in our ultimate guide:Interest Rates on Home Loans in 2024

 

 

Documents Required for Different Types of Home Loans

Applying for a home loan involves several documents to verify your identity, income, and the property. Here is a general list of required documents for Home Loan.

 

Identity Proof	Voter id, PAN card, or Aadhaar card
Address Proof:	Electricity bills, rental agreement, or Aadhaar card
Income Proof	Salary slips, IT returns, bank statements
Property Documents	Sale agreement, property tax receipts, and NOC (No Objection Certificate) from the Builder
Employment Proof	Offer letter, employment contract or company ID, Business registration documents for self employed

 

 

How to Apply for Home Loans?

Application for home loans is a step-by-step process. The following can be some of the major steps you may follow in order to get through an application for a home loan:

1. Research & Compare: You will need to research various lenders like commercial banks, housing finance companies, and NBFCs to apply for home loans. Then, compare their interest rates with loan terms along with associated costs.

2. Check Eligibility: Research the eligibility criterion and choose the lender where you are highly eligible.

3. Document Collection: The applicant has to arrange all the documents. This consists of identity proof, address proof, income proof, and property documents. For more details on documents see the table above.

4. Apply: You have to fill in the application form for the loan. You can do it online now. Submit the application form with all the required documents.

5. Processing of Loan: You have to wait till your loan application gets sanctioned. The lending company would take its time processing and analyzing your application.

6. Approval and Disbursal of loan: After the approval on your loan application, you would get a sanction letter. The loan amount would be disbursed after that  according to the terms of agreement.

 

Conclusion

Getting a perfect home may be an exciting feeling, but it actually becomes an overwhelming journey for some people. Don't worry; we are here to help you through it. If you know your needs and the various loan options available, you are already halfway down the smooth journey. You would be better placed in choosing the most appropriate home loan if you carefully assess your needs and financial condition. This will make becoming a homeowner quite easy.

 

Confused about home loans vs. construction loans? Learn the key differences here:Home Loan vs. Home Construction Loan.