What are the different types of Home Loan?
In addition to regular Home Loans, multiple Banks, NBFCs and Housing Finance Corporations (HFCs) provide different kinds of Home Loans for different purposes. It’s prudent to first assess your exact requirements in order to know what kind of Home Loan is best suited for you. Composite Loan: Just as the name suggests, a Composite Home Loan is one which disburses the loan amount over multiple installments. It’s especially useful if you want to buy land, either as an investment or to build a house upon it. The first disbursal will be for buying the land. And the subsequent ones, for the various stages of construction of a house upon said land. Home Construction Loan: A Home Construction Loan can be availed by anyone who’s looking for funds for the construction of a house. You are eligible for this loan only if you already own a plot of land and plan to build a house on it. Here too, just like with Composite Loans, the total loan amount will be disbursed in accordance to the various stages of construction of the house. Home Improvement Loan: These are short-tenure loans that can be easily availed at the same interest rates as regular Home Loans to renovation and repairs. Bridge Loan: If you wish to sell your existing house and use its proceeds to buy a new one, a Bridge Loan will help you cover the deficit. Interest Saver Loan: You can link your bank account to your Home Loan account. And any amount deposited into your account, over and above your EMI obligation, will be considered as a prepayment towards your Home Loan. Thereby, significantly reducing your interest burden. Step Up Loan: A Step Up Loan is a type of Home Loan where you pay lower EMIs during the initial years of your tenure. This kind of loan is especially useful for young professionals who are just getting their careers started. That said, you always have a provision to increase the EMI amount as desired. Can I get a home loan for the entire value of the property? No. Home loans are generally provided by the financial institutions up to maximum of 80% (90% for loan amount below Rs 20 lakhs) of the agreement value of the house.