Home loan is one of the most common types of loan available in India with a lot of options to choose from at low-interest rates. After the advancement in technology and online procedures, financial institutions can sanction the loan within 48 hours. According to SBI’s economic research report “Ecowrap,” the home loan market is going to double in the next 5 years. To know more about the types of home loans read along.
Types of Home Loans Available in India
There are various types of home loans available in India, some of the most popular types are:
● Home purchase loan
You can buy a brand-new or pre-owned house with this type of loan. Both salaried and non-salaried people can afford this loan easily. Financial institutions can pay around 80-90% of the total amount and give up to 30 years of repayment tenor after evaluating your eligibility.
● Home extension loan
This type of home loan is useful to people who want to extend or expand their existing house. It is cheaper than home purchase loans and often taken as an additional facility in an existing loan. Some banks considered extension and improvement under the same category so check the criteria before applying.
● Joint home loan
More than one person can be the borrower in this home loan category, and equal responsibility is shared between them. Co-borrowers are generally family members like spouses, parents or siblings. The approval chance is high, and both applicants can avail home loan tax benefit individually.
● Home construction loan
You can opt for this loan when you wish to construct your home on your own plot. It is a little different than general home loans as it is disbursed in several stages depending on the stage of the construction. The amount of loan sanctioned will depend on the approx cost that is needed for that particular phase of construction.
● Plot home loan
Owning a plot is convenient and can be of use in future, you can purchase a plot for your personal or professional use. You can use a plot home loan to purchase it from several lenders available in the market without any hassles.
● Home loans for NRI
This loan is made for residents who are not from India, they can take the help of this loan to construct or renovate their properties. The set of formalities for this is different from the normal procedure. Contact your lender to know the exact set of formalities.
● Home loan balance transfer
If you want to transfer your existing home loan to some other NBFC then you can choose home loan balance transfer. People opt for this when they find out about some other lender who is offering a lower rate of interest or better repayment structure.
How to calculate the EMI on your home loan
We can calculate the home loan EMI as per given below:
P x R x (1+R)^N / [(1+R)^N-1]
Where,
P = Principal loan amount
N = Loan tenor in months
R = Monthly interest rate
The manual calculation can be a bit difficult, increasing the chances of error. To avoid any confusion you can use an online home loan calculator.
Leading financial institutions also extend pre-approved offers to their existing customers. Such offers are available on financial products, such as home loans, loans against property, etc., and simplify the application process.
There are several tax advantages of availing a home loan in India, besides helping customers save money in the long run. Apart from that the rate of appreciation for any property is likely to increase every year. Home loan offers a lot of flexibility and you can enjoy several benefits on the prepayment of the home loan as well. Just keep in mind to conduct your research properly and then take action.
