Types Of Home Loans You Can Choose From
Home buyers have to their disposal a variety of home loans offered by banks. Each home loan depends on the purpose of availing the home loan, and the interest rates.
MakaanIQ lists the most popular home loans buyers can opt for depending on their requirements:
The interest rate in this home loan remains fixed for a certain period of time. At fixed rates, interest is generally higher than other types of home loan due to the security it provides.
If you opt for a floating interest home loan, the interest you pay will fluctuate according to the changes in market conditions. The initial interest rate might be lower for such loans but if the interest rates go up, the EMI outgo can go up drastically. The only disadvantage with this home loan is that banks are not as prompt with reducing interest rates.
Loan against property
This is the most secure loan from a bank's perspective. In case a home buyer opts for this loan, they can mortgage an existing property to obtain another home loan. The best interest rates are offered in this loan type.
Short-term bridge loans
Bridging loans help customers who want to sell a property to buy another and face short-term fund shortage. Home buyers can either book or pay up the amount for the new home, until they find a buyer for the old property.
This is offered to home owners who want to take a loan while paying off their existing home loan. This loan is given after a few years of the payment of the existing home loan. This is to have a fair idea about your repayment track record.
Home extension loans
Apart from financing the purchase of home, banks also offer home extension loans. This loan is extended to home owner who want to modify or renovate their older homes.
Home improvement loans
These loans are for home buyers who have just moved into their new home and want to invest in beautifying it. These loans are also suitable for those who buy second-hand homes and want to re-model or renovate them. A home owner can also finance expensive art work, furniture among others and replace a few parts of the structure utilising this form of loans.