Various Types Of Home Loans
Home Loans are not only restricted to the purchase or construction of a new home; they can also be used for re-mortgaging, home improvement or renovation, and raising cash. There are various types of home loans issued by banks in India. A brief description of the different types of loans designed to meet the needs of the customers is as follows:
Home Purchase Loan: It is the well known and the most popular category under home loans. It is used for the purchase of a new home.
Home Extension Loan: It caters to expansion or extension of an existing loan. An example of a situation where people take this loan is a requirement or an addition of an extra room. As this loan concerns “extension”, one might have to get the approval from the concerned municipal authorities prior to getting the loan sanctioned.
Home Improvement Loan: It is provided for renovations and repair works that are to be executed in a home.
Home Construction Loan: It is available for the funding of the construction of an existing home or a new plot. It is sometimes confused with home purchase loan; however, there is a wide difference between the terms and conditions of the two loans.
Home Conversion Loan: It is provided for the people who have financed the present home and want to buy and shift to another home for which some extra funds are essential. The home conversion loan transfers the existing loan to the new home. During the transfer it includes the extra amount that is required. The benefit of the provision of home conversion loan is that one can buy and shift to a new place without the need of pre-payment of the previous loan.
Land Purchase Loan: It is for purchasing a land for either construction or investment purposes. It is one of the highly availed loan schemes.
Bridge Loan: In simple terms, it is designed to bridge the gap between a new plot and the one that is sold. It helps in financing the new home until a buyer is found for the old home. The difference of amount between the two homes is funded by bridge loan.
Stamp Duty Loan: It is for the payment of the stamp duty.
There are other types of less prevalent home loans as well. For example: Refinance Loans, NRI Home Loans and Balance Transfer Loans.