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9 Types of Home Loans You Can Avail in India

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9 Types of Home Loans You Can Avail in India

Consumers in India have access to a diverse range of home loans through financial institutions. Whether you want to buy a home or extend or renovate your current one, banks can help you with a customized plan to meet your specific home loan needs.

In this post, we will go over the various types of home loans.

Home purchase loan

As the name implies, this is the most common type of home loan obtained when purchasing a new home. Home loans are available from all major banks, including SBI, HDFC, ICICI, PNA, and Axis Bank.

As a home loan, you will receive up to 75-85% of the house's value. You can find all the information you need about home purchase loans right here.

Home improvement loan

Banks provide home improvement loans for the expansion, repair, or renovation of a home that the borrower has already purchased. The borrower may use the loan proceeds for either external or internal home improvements.

Some banks provide a separate category of loans for home extensions, which they refer to as home extension loans. Home improvement loans are available from all major banks in India.

You can obtain approximately 80-90% of the work estimate. Read our exclusive post on home improvement loans for more information.

Home construction loan

Customers seeking funds to build a new home are typically offered a home construction loan. The interest rates and application procedure are identical to those of any other type of home loan.

Home conversion loan

Buyers can obtain a home conversion loan if they have already obtained a home loan from a bank and are looking for an additional loan amount to purchase another home. The previous loan's outstanding balance is transferred to the new loan.

This type of loan is typically used by people who want to avoid having to repay a previous or existing loan. However, because these loans are intended for second homes, borrowers may have to pay a higher interest rate than on new home loans, depending on the bank's policy.

Land purchase loan

This type of loan is used by people who want to buy land for the purpose of building a house or investing. This loan is available from all major banks in India. A land loan has a much shorter term than a home loan, typically ranging from 5 to 15 years. This means that your EMI will be higher as well.

The loan to value ratio of a land loan ranges from 60% to 75%, and most lenders have a maximum amount that you can borrow. You'll have to pay nearly 30%-35% of the total cost as a down payment. Most land loans have interest rates that are comparable to home loans.

Bridge loan

These are tailored loans for people who want to sell their current home and buy a new one. This loan, as the name implies, bridges the financial gap created by purchasing a new home and selling the existing one.

The bridge loan is a short-term loan that can be used between buying a new home and selling the old one. Interest rates are slightly higher than regular home loan rates because it is a short-term loan.
To qualify for this loan, you must provide the bank with information about your new property. If you are unable to sell your old house within six to twelve months of receiving this type of loan, your bank may convert it into a mortgage loan with a higher interest rate.

Balance transfer home loan

A balance transfer home loan allows buyers to take advantage of the market's lower interest rates. Although the RBI insists that lower interest rate benefits be passed on to existing customers, most Indian banks do not, making a balance transfer a lucrative option for borrowers.

Existing home loan customers can switch their home loan to another bank to take advantage of the lower interest rate. A balance transfer home loan alleviates the burden on buyers who already have mortgages.

Stamp duty loan

Banks provide stamp duty loans to assist buyers in covering the cost of stamp duty due at the time of property registrati

Reverse mortgage loan

In India, this is a relatively new concept aimed at providing financial assistance to senior citizens. Under reverse mortgage loans, the borrower pledges the property, and the bank determines its current market value before disbursing the loan amount to the borrower in periodic payments.

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