14 Feb 2023

A home is one of the biggest financial investments you make in life. At some point in our lives, we all wish to purchase a home. Owning a home is regarded as being “truly” settled in life in India, and we all strive for this validation and respect. To buy a home is a dream that many of us strive for and toil day in and out to make come true.

But with rising real estate prices, a home is something that not everyone can afford. This is where a home loan steps into the picture and helps us to realise our dreams. Financial institutions in India provide a variety of home loans to meet the varied needs of different applicants. Below are some of the most popular home loan types that you should know about:

Standard Home Loan

A standard home loan enables you to borrow money from the lender to purchase the home of your dreams. It is the most popular type of loan that people take to purchase a property of their choice. The money is repaid in monthly instalments or what we call EMIs after the purchase.

Financial institutions and lenders usually provide up to 80-85% of the market value of your home if you meet the eligibility criteria for the loan. The interest rate on home loans can be fixed, floating, or hybrid.

Land-purchase/ Plot Loan

Land-purchase loans or plot loans are opted for by individuals who want to buy a plot or land on which they are looking to construct a house. Purchasing land is a flexible option and allows the buyer to save funds and construct a house whenever his/her finances allow the same. Many others buy land as an investment.

Generally, banks or non-banking financial institutions (NBFCs) lend up to 80-85% of the price of the plot or land to finance a residential plot. However, the interest rates on plot loans are slightly higher than house loans for the purchase.

Home Construction Loan

A home construction loan is for people who want to construct their own home rather than buy a pre-constructed house. The approval process for this type of loan varies from others, as it takes into account the cost of a plot or land as well. The most important clause here, when applying for a home construction loan, is that the plot must have been purchased within a year for its cost to be included in the loan amount.

The loan amount is decided according to a rough estimate of the construction cost of the home. It may be disbursed in one go or in multiple instalments.

Home Extension Loan

As your family grows, so does the need for space. You might need more space in your existing house for your child or might want to add an additional library or WFH station. That’s when you opt for a home extension loan to extend your house. A home extension loan allows you to expand your space, even if you do not have adequate capital.

Many banks and NBFCs offer loans for house expansion, including alteration of the current structure and construction of new rooms.

Home Improvement Loan

A home improvement or renovation loan is used for renovating an existing home. It allows you to easily finance the renovation, repairing, or refurbishing works in your house. This loan usually involves the coverage for a complete renovation, including upgradation works, exterior and interior paints or repairs, tiling, flooring, plumbing, electrical work, woodwork, and the rest. They are a popular choice for people looking to revamp their spaces due to low-interest rates.

NRI- Home Loans

Non-residential Indians (NRIs) and Persons of Indian Origin (PIOs) who are looking to buy their property in India or repair the old one can opt for an NRI-home loan. The applicant needs to have legal proof of their Indian origin or status as an NRI.

Most of the private and public sector banks generally offer NRI loans as a product of their housing loan portfolio. However, the paperwork for an NRI home loan is far more exhaustive than for regular home loans.

These are some of the most availed home loans in India. Now that you know about them, make sure to select one that best suits your requirements and is tailored to your needs. Make sure you thoroughly check the eligibility and documentation requirements before applying to smoothen the process for the loan and realise your dream of being a homeowner.

At Paranjape Schemes, we offer a diverse platter of homes that cater to your dreams. From Multi-role homes to right-fit plots, nature-centric township plots, township villas, luxurious mansions, sea-view vacation villas, and more. We have something that fits every need and dream. To know more about us and our projects, visit https://www.pscl.in/