Which Are The Different Types Of Home Loans?
The most popular and advantageous way of buying your dream house is availing a home loan. Now-a-days, many people are applying for home loans. They are interested in buying residential properties for residing or for investing. The types of home loans include home purchase loan land purchase loan, home construction loan, home renovation loans and so on.
Home loans are featured with different benefits such as tax benefits. Banks and financial institutions provide various types of home loans according to the requirements of customers. There is no single type of loan. Home loans are of different types like for purchase of open loan or for renovation. Let us discuss following types of home loans.
Home Purchase Loans
These are the most commonly found home loans. This loan can be availed for purchasing new residential property or a used one. You can obtain this loan on fixed or floating interest rates. Thus, these are also known as hybrid loans. These loans are provided by all banks and financial institutions.
Land Purchase Loans
These loans are availed for purchasing open plot of land so that you can construct a house on it as per your preferences. You also have the opportunity of buying this land for investment purpose. Most of the leading banks of the country provide these loans and up to 85 percent of the price of land.
Home Construction Loans
With this loan assistance, you can build a house according to your desires. Please note that the home construction loan is different from that of land purchase loan. Land purchase loan provides loan only for the purpose of buying land. It is up to you whether you want to construct a house or invest it for long-term gains. You cannot build a house with land purchase loan. The construction of house on the land can be done with home construction loans. Before applying for this loan, you need to buy land one year prior. For application purpose, a rough estimate of the house construction needs to be submitted to the bank. Many leading banks provide this kind of loan facility.
Home Extension Loans
As the name suggests, this loan is given to the applicant for extending the house. Extension of house refers to including a balcony, adding a new room or a complete floor. But for approval of this loan, prior approval is needed for such extension from concerned authorities.
Home Improvement Loans
You already own house but cannot decorate it beautifully due to shortage of funds. For this purpose, you can opt for home improvement loans. Home improvement or renovation includes painting, flooring, repair works and does not include purchase of furniture or consumer durable goods.
Home Conversion Loans
You have already taken loan for your house but want to shift to new house. Then, you can transfer the existing loan and purchase the new house. You are not required to repay the previous loan.
Conclusively, as per your dynamic needs, banks are providing different types of home loans. You must be familiar with this type of loans before applying. With sufficient knowledge, you can select the most appropriate home loan.