All You Need to Know About the Types of Home Loans in India

Settling down in India usually means settling down in a nice home, with your loving family, a
good vehicle to your name, and a lifestyle that is way better than you had ever lived. In this
day and age, settling down has gotten a tad bit difficult. While all the boxes have been
ticked, buying a home you call your own often stops you from living the complete definition of
‘settling down’. With a smart guide to purchasing homes, all you require now is a suitable
home loan. Banks and financial institutions offer different types of home loans in India, all
based on what suits your need. Some types of home loans are for remodelling your house,
some others are centred on purchasing plots for your home and some types of home loans
are a combination of these two. Here is a quick overview of different types of home loans in
India and various home loan benefits:

Land Purchase Loans
A Land Purchase Loan is reserved for the buying of vacant plots. This type of loan is often
confused for a Home Purchase Loan. However, this loan is solely for those who are looking
to secure the land for the construction of their home. Banks often lend an 80-85% of the
price of the land. As for tax deduction, you can avail the same only if you are constructing a
house in that plot of land. The tenure for a land purchase loan can go up to 15 years.

Home Purchase Loans
A Home Purchase Loan is one of the most commonly used housing loans in India. This type
of housing loan is reserved for those who wish to purchase a pre-owned home or a new
property. These loans can have fixed rates, floating rates or hybrid rates of interest. Most
housing financial institutions and banks provide these loans, lending 80-85% of the loan
amount. For such a housing loan, tenure can go up to 30 years and above, with the borrower
even eligible for a tax deduction.

Home Construction Loans
A Home Construction Loan is applicable for people who wish to construct their own house in
the plot they have purchased. For this type of housing loan, the particular plot of land should
have been purchased within a year for its value to be added as a component in calculating
the total price of the house. If it was purchased over a year ago, then only the estimation
regarding the construction work will be included. The borrower first works out how much the
estimation cost would be and then the lender decides whether the loan can be sanctioned or
not. The repayment of such a housing loan can be done in multiple instalments.

Home Conversion Loans
A Home Conversion Loan is usually reserved for second homes. In other words, this type of
housing loan is reserved for people who already have a home loan for the purchase of a
house and are looking for another loan amount to buy another house. It implies that the
outstanding amount for the previous loan is simply shifted to the new loan. Perhaps the best
feature of such a housing loan is that you needn’t go through the arduous task of applying
for a loan all over again.
Home Extension Loans

A Home Extension Loan is almost similar to a Home Construction Loan except it is only
reserved for those people who wish to expand some construction work in their already
established house. For instance, you may wish to increase the size of your room by adding a
verandah to it. For this extension, you will have to visit the bank to sanction you a loan for
this construction.

Home Improvement Loans
A Home Improvement Loan is reserved for people who wish to remodel their house. This
type of housing loan bears in mind the total renovation cost which includes repairs to the
house, wall painting, waterproofing, wiring, etc. This renovation loan is more short-term.
Home Improvement Loan interest rates range from 9 – 12.9%. The maximum value of the
loan can be as high as 90% of the home’s market value.

NRI Home Loans
An NRI Home Loan is for those Non-Resident Indians who wish to purchase a home in India.
This type of housing loan can be lent for any kind of property whether it is under
construction, ready for possession or a pre-owned land. Buying a plot of land also comes
under this home loan. While this type of home loan is similar to a regular housing loan for
other Indians, the interest rate for NRIs is fairly higher and the tenure of the loan is lesser.
Home Loans have grown popular in the country in the past few years. Home loan benefits
range from flexible rates and easy approval, leaving your dream home merely a few steps
away. Your dream home could be a palatial bungalow in Chennai’s OMR, a simple 3BHK in
Bangalore’s residential area or a roomy duplex. Visit BSCPL Infrastructure Ltd and avail the
best of facilities and quality living.

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