The following are some popular types of home loans available in the Indian housing finance market :
1. Land purchase loans
Land purchase loans are taken to buy a plot of land on which a borrower wishes to construct her/his house. Most banks offer up to 85 per cent of the price of the land. These loans can be availed for residential as well as for investment purposes. Almost all leading banks offer this loan like ICICI Bank (land loan), Axis bank (loan for land purchase) etc.
2. Home purchase loans
The home purchase loans are the most popular and the most commonly available home loan variants. These loans can be used to finance the purchase of a new residential property or an old house from its previous owners.
3. Home construction loans
These loans can be availed by those individuals who want to construct a house according to their wishes rather than purchasing an already constructed one. The loan application and approval process for home construction loans are somewhat different from those of the commonly available housing loans.
4. Home expansion/Extension loans
Home expansion or extension loans are useful in situations when people want to expand their existing house. Expansion includes alteration in the current structure of the residence to add extra space such as constructing a new room, a floor, a bigger bathroom or enclosing a balcony. Though many banks provide loans for these purposes as part of home expansion loans, some banks lend for the same purposes as part of their home improvement loans.
5. Home improvement loans
Home improvement loans are availed by individuals who already own a house but lack the funds to renovate it. All kinds of renovations and repair works can be financed using this variant of home loans such as internal and external painting, external repair works, electrical work, water-proofing and construction of underground or overhead water tank etc.
6. Home conversion loans
Those borrowers who have already purchased a house by taking a home loan but now want to buy and move to another house opt for the home conversion loans. Through these loans, they can fund the purchase of the new house by transferring the current loan to the new house. There is no need to repay the loan on the previous home.
7. NRI home loans
NRI home loans is a specialised home loan variant which has been developed to assist non-residents in acquiring housing finance to buy residential property in India. These loans are meant exclusively for the non-resident Indians.
8. Balance transfer loans
Balance transfer option can be availed when an individual wants to transfer his home loan from one bank to another bank. This is usually done to repay the remaining amount of loan at lower interest rates or when a customer is unhappy with the services provided by his existing lender and wants to switch to another lender.
9. Stamp duty loans
Stamp duty loans are provided to pay off the stamp duty charges on the purchase of a property. The amount from this loan can be used solely for this purpose. This segment of home loans has yet not gained much popularity.
10. Bridged loans
Bridge loans are short term loans which are meant for people who already own a residential property but are planning to buy a new house. It helps borrowers to fund the purchase of the new house until a buyer is identified for the old house.
