Types of Home Loan

• 9 July 2016 | 1607 Views | By Mint2Save

Since ages, having own home is considered a milestone for one’s financial success. Evolved over time, having a home in a particular city marks one as a native of that area. Providing a sense of belonging and comfort, a house is everybody’s need.

Even the government acknowledges the need of one having his own house that there are schemes popping up all the time and tax relief on the housing loans keep on enhancing in every few years. This has been a prime reason in promoting the idea of housing loans. Let us have a look on what kind of housing loan options are available with the bank nowadays:

1.To Purchase a Flat/ Apartment: Loans to purchase an apartment are one of the most popular ones in the metropolitan and Tier 2 cities. Loans to purchase a flat can be sanctioned in two ways:

(a)Construction of the Residential Complex is incomplete: In the case where the houses are not ready to shift, the developers of these flats gets the project approved from the banks and NBFCs, post which it is ready to be financed by the bank. In the approval process, the legal clearance and master valuation of flats is done by the bank. Upon approval, the banks can sanction the loans upon the sale agreement only as the registry is not possible.

It is upto the discretion of the builder that from which banks or NBFCs he get can his residential project approved, hence a number of banks might filter out in the process. They can finance only after the project is complete and Sale Registry of the flat can be made.

(b) Flat is ready to Shift: In these cases, mostly all the banks tend to finance the housing loan subject to the legal clearance report. The Registry of the flat is also possible. But such cases are rare as people seek to purchase a flat before its completion so that they can get it on lower prices.

2. To Purchase a Land: Home loans can also be provided in order to purchase a land or acquire a residential land allowed by respective development authority. Construction on land which have been financed, might be necessary during a certain time period, depending upon the guideline of the financial institution. Purchasing a land comes in handy when you are on a transferable job, but want to settle down in a particular city after the retirement. It can also be useful when the surrounding area hasn’t developed much and immediate construction is not needed.

3. To Build a House: One of the most basic reasons for which a housing loan is taken is: building a house. The expenses of building a house by own are always mounting and crossing the desired budget is now a common talk. Common, but a lot a problematic. By getting financed for construction of house, you get a safety cushion.

Suppose, the house you want to construct has been estimated to take around Rs. 20 Lakhs. You can approach the bank to get sanctioned a loan of Rs. 18.00 Lakhs. Now, if the cost escalates to Rs. 25.00 Lakhs,  you can avail a loan for further construction and keep your expenses managed with the help of the bank.

4. To Renovate and Furnish the house: When your dwelling gets its paint peeled off or you want to put new doors, windows or re-furnish the floor, you can avail a housing loan for renovation. When you head to a bank for this loan, do explore what options they give under it as a lot of banks do provide financing of furniture and even appliances under this scheme.

5. Second and third housing loans: When you already a house to live by, you can always get another housing loan for any of the purpose detailed above. Second housing loans are quite common as development of different areas happen at irregular times and people do take house as a valuable investment. While second housing come under retail residential loans, a third housing loan to acquire a property would come under commercial real estate exposure and interest rates might be higher than that of a normal housing loan.

So, these are one of the most popular types of housing loans available with almost all banks and NBFCs. Do  have a deep information and check of the housing loan that you have availed or are going to avail soon.