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15 Types of Home Loans Every Smart Borrower Should Know

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Are you thinking about taking a home loan, but aren’t sure which one is the most appropriate based on your needs? Don’t worry you’re not alone. This article will help you understand which type of home loan may be best suited to your needs.
Loan Against Property

  1. Home purchase loans: Do you want to BUY a new home or an existing property? If your answer is YES, then home purchase loan is your best bet. This type of home loan is the most popular home loan available in the market and you can get this loan from any bank of or NBFC as this type of loan is offered by all banks and NBFCs in India.
  2. Land purchase loans: Do you want to BUY a plot of land for construction in future? If your answer is YES, then land purchase loan is your best bet. Land purchase loans can be availed for purchasing land for home construction and investment purpose.
  3. Home construction loans: Do you want to build your own home on a freehold, leasehold plot or on a plot allotted by an urban development authority? If your answer is YES, then home construction loan is your best bet. You can get a home construction loan to pay for the cost of building a home.
  4. Home improvement loans: Do You Want to Renovate Your Home and need funds for that? If your answer is YES, then home improvement loan is your best bet. With a home improvement loan, you can upgrade and revamp your existing home.
  5. Home extension loans: Do You Want to extend or add space to your home such as additional rooms? If your answer is YES, then home extension loan is your best bet. With a home extension loan, you can add more space to your home constructing a new room, a new floor, a new bathroom or a new balcony.
  6. Home conversion loans: Do you want to transfer your existing home loan into a new house along with the extra amount? If your answer is YES, then home conversion loan is your best bet. With a home conversion loan, you can get the loan for the purchase of another house by converting the already existing home loan and there is no need for pre-payment of the previous loan.
  7. Balance transfer loans (BT): Do you want to lower your EMI burden by transferring your existing home loan? If your answer is YES, then balance transfer loan is your best bet. With a balance transfer loan, you can transfer your existing home loan at lower interest rate.
  8. Balance transfer and top up loans (BT+Top-Up): Do you want to get an additional top up loan along with the existing balance transfer of your home loan? If your answer is YES, then balance transfer and top up loan is your best bet. With a balance transfer loan and top-up, you can transfer your existing home loan at lower interest rate and get an additional top-up loan amount up to 100% of the original home loan.
  9. Bridge loans: Do you need help to make a down payment on a new home before your current home is sold? If your answer is YES, then bridge loan is your best bet. With a bridge loan, you can get funds to purchase a new home until a buyer is found for the old home.
  10. Rural home loans: Do you want to BUY or construct a house in rural or semi-urban areas? If your answer is YES, then rural housing loan is your best bet. Rural loans are also available for agriculturists, dairy farmers, planters, and horticulturists.
  11. Tribal home loans: Do you want to BUY or construct a house in tribal or hilly areas? If your answer is YES, then tribal housing loan is your best bet. This is a special home loan that is only available for tribal areas where mortgage of the property is not possible.
  12. Home loan as an overdraft: Do you want to lower the interest burden of your home loan using the surplus funds in your account? If your answer is YES, then home loan as an overdraft is your best bet. This loan not only provides you the flexibility of using funds at your convenience but also a facility to keep your extra money of saving accounts in this account to reduce the interest burden.
  13. Pre-approved home loans: Do you need to get the sanction of your home loan before finalizing the property?  If your answer is YES, then a pre-approved home loan is your best bet. With this type of loan, you can get the sanction of your home loan on the basis of income details only but this sanction would only be valid for 4 months and you will have to submit the property documents in this validation period.
  14. Loan against property: Do you need a loan against your property for business, marriage or personal needs? If your answer is YES, then a loan against property is your best bet. With this type of loan, both residential and commercial properties can be mortgaged.
  15. NRI home loans: Do you live aboard and want to buy a property in your homeland India?  If your answer is YES, then an NRI home loan is your best bet. This type of loan is available only for non-resident Indians (NRIs) & persons of Indian origin (PIOs).
Now that we have learned about different types of home loans, let’s read 20 home loan myths that will help you select best home loan based on your objectives.

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