Types of Home Loans Available in India

Buying a house in India has now become a must for settling down. For most individuals, owning a home is a lifelong goal come true, but it’s also a costly endeavour. The most significant way to fit a dream house into a buyer’s budget is via a home loan, which takes a lot of work on the buyer’s behalf.

A Home Loan is a type of method for most individuals in India to realise their ambition of owning a home because of growing real estate costs. There are various types of home loans currently offered by Indian lenders to satisfy their customers’ demands better. It is possible to utilise the various types of home loans in India to acquire a new house, apartment, or piece of land and renovate, extend, and restore an old property. So, let’s understand how a home loan can help you make your dreams true.

Types of Home Loans in India

Lenders offer a variety of home loans that cater not only to the diverse housing needs of individuals but also to their specific financial circumstances. Below are some popular types of home loans available in the financial market:

1. Loans for Purchase of Land

• Purpose: Acquiring land for future use or investment.
• Loan Coverage: Up to 85% of the total land cost.
• Example Lender: Axis Bank.

Eligibility Criteria for Purchase of Land

Particulars	Age	Employment
Criteria	18 years to 65 years	Salaried, self-employed, professionals, and non-professionals

Documents Needed for Home Purchase Loan

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Property-related documents
• Existing loan documents

2. Loans for Home Purchase

• Purpose: Buying a new or pre-owned house.
• Interest Rate: Floating or fixed, typically between 9.85% and 11.25%.
• Loan Coverage: Up to 85% of the total property value.

Eligibility Criteria for Home Purchase Loans
Read: Understanding Home Loan Tenure and Why It’s Important

Particulars	Salaried	Self-Employed
Age	18 years to 65 years	18 years to 65 years
Employment	Minimum two years of experience	750 or above credit score
Credit Score	Minimum five years of experience	750 or above credit score

Documents Needed for Home Purchase Loan

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Documents of property
• Existing loan documents (if any)

3. Loans for Construction of a House

• Purpose: Constructing a home according to specific requirements.
• Approval Consideration: Considers the cost of the plot.
• Example Lenders: Bank of Baroda, UCO Bank, Canara Bank.

Eligibility Criteria for a Loan for Construction of a House

Particulars	Salaried	Self-Employed
Age	18 years to 65 years	18 years to 65 years
Employment	Minimum two years of experience	750 or above credit score
Credit Score	Minimum five years of experience	750 or above credit score

Documents Needed for Loan for Construction of a House

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Property-related documents
• Existing loan documents (Optional)

4. House Expansion or Extension Loans

• Purpose: Funding additional constructions like balconies or extra rooms.
• Example Loans: HDFC Home Extension Loan, Bank of Baroda House Renovation Loan.

Eligibility Criteria for Home Expansion or Extension Loans

Particulars	Age	Employment
Criteria	18 years to 65 years	Salaried, professionals, non-professionals, and self-employed

Documents Needed for Loan for Construction of a House

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Existing loan documents
• Home extension or property-related documents

5. Loans for Home Improvement

• Purpose: Renovation and repair works for enhanced aesthetics and functionality.
• Example Lenders: Union Bank of India, Vijaya Bank.

Eligibility for Home Improvement Loan

Particulars	Age	Employment
Criteria	18 years to 65 years	Salaried, professionals, non-professionals, and self-employed

Documents Needed for Loan for Construction of a House

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Original Property Title Deeds
• Estimated Renovation Quotation

6. Balance Transfer Home Loans

• Purpose: Transferring a home loan from one bank to another for better terms.
• Eligibility Criteria: Similar to home purchase loans.

Documents Needed for Loan for Construction of a House

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Property-related documents
• Bank statement showing repayment of ongoing loan
• Loan statement and list of property documents in possession of the existing lender

7. NRI Home Loans

• Purpose: Designed for non-resident Indians (NRIs) buying residential property in India.
• Example Lenders: Private and public sector banks.

Eligibility Criteria for NRI Home Loans

Particulars	Age	Employment
Criteria	18 years to 65 years	Salaried, professionals, non-professionals, and self-employed

Documents Needed for Loan for NRI Home Loans

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• General power of attorney
• Property papers
• Last year ITR, except for NRIs from the Middle East countries

8. Bridged Loans

• Purpose: Short-term loans for existing homeowners planning to buy a new property.
• Example Lenders: Vijaya Bank, HDFC Bank.

Eligibility Criteria for Balance Transfer Home Loans

Particulars	Age	Employment
Criteria	18 years to 70 years	All property owners and co-applicants

Documents Needed for Loan for Construction of a House

• Proof of Age: Birth certificate, Std.10 mark sheet
• Proof of Address: Voter ID card, Aadhar Card, Utility Bills
• Proof of Income: Salary slip, Income Tax Returns (ITR) details
• Identification proof: Permanent Account Number (PAN) card, Voter ID, Passport
• Bank statement showing repayment of ongoing loan
• Property-related documents

9. Stamp Duty Loans

• Purpose: To cover the costs of stamp duty charges after acquiring a home.
• Example Lenders: Not explicitly mentioned.

Eligibility and Documents for Stamp Duty Loans

Eligibility Criteria	Documents Required
Age	– Proof of Age: Birth certificate, Std.10 mark sheet.
(18 to 70 years)
Employment	– Proof of Address: Voter ID card, Aadhar Card, Utility Bills.
(All property owners
and co-applicants)	– Proof of Income: Salary slip, Income Tax Returns (ITR) details.
Credit Score	– Identification Proof: PAN card, Voter ID, Passport.
	– Bank Statements: Showing repayment of ongoing loans.
	– Property Related Documents: Details of the property transaction.

Benefits of Taking a Home Loan

Advantages in terms of taxation

The most significant advantage of taking out a house loan is the income tax deduction that you may claim on the interest and principal payments you make. You can claim up to Rs.1.5 lakh on principal repayments under Section 80C, up to Rs.2 lakh on interest repayments under Section 24B, up to Rs.2 lakh on interest repayment in exceptional circumstances under Sections 80EE and 80EEA, and up to Rs.1.5 lakh on stamp duty expenses under Section 80C. You can also claim up to Rs.2 lakh on interest repayment under Section 24B, up to Rs.2 lakh on interest repayment in particular circumstances under Sections 80EE and 80EEA, and up

Interest rates are being lowered.

The interest rate on a house loan is far lower than the interest rate on any other loan type available. So if you find yourself in a financial bind, you may be able to get a loan to supplement your current house loan at a lower interest rate than a personal loan to resolve the situation.

Due diligence on a piece of land

When you acquire a home via a bank, the bank will undertake extensive legal research on the Property and determine whether or not any of the paperwork you provide is legitimate.

This due diligence investigation on the part of the bank will lower the likelihood of you becoming a victim of fraud. Assuming the bank authorises the Property, you and your home are in good hands.

Longer Tenure for Loan Repayment

In contrast to other types of loans, home loans have a lengthier payback period, often as long as 25-30 years. This is due to a large amount of money required to be borrowed to acquire a home.

Spreading the loan amount and applicable interest rate over a more extended period would lower the monthly EMIs, easing the borrower’s load.

There is no prepayment penalty.

When you take up a floating-rate home loan, you can make prepayments towards the loan anytime you have a lump amount of money on hand without incurring any prepayment penalties or interest charges. This will allow you to pay off your house loan far earlier than the specified loan term.

Facility for transferring balances

The decision to transfer your house loan from one lender to another may be motivated by various factors such as the interest rate, fees, and customer service experience, among other things.

Process of Applying for a Home Loan

Obtaining a house loan has become simpler than ever before, owing to the many channels available today due to the advancement of technology. For example, one may visit a bank location personally and inquire about house loan choices or apply online.

When you apply, the bank will gather the necessary paperwork from you. Then, it commences the processing of your application, which includes reviewing your CIBIL score, determining the value of the asset, and calculating your eligibility based on your income and obligations.

Banks determine whether to accept or deny a loan after analysing and confirming all papers.

NoBroker Home Loan Services 

Owning your dream home can seem like an unachievable goal when you do not have the funds for it. At NoBroker, we aim to help all our customers reach their goals. And to make it easier for them, we’ve tied up with leading banking partners. With our home loan services, you can avail a loan without having to leave the comfort of your home or skip days of work. All you need to do is fill out this application, submit the necessary documents and receive quick home loan disbursal.

NoBroker has partnered with leading banks like SBI, PNB, HDFC, ICICI, Bajaj Finserv, Union Bank, Bank of Baroda, LnT, Citi Bank, Piramal, Kotak Mahindra, LIC HFL and Bank of India. You can avail home loans with minimal documentation, at interest rates as low as 8.2% with the maximum loan tenure being 30 years. NoBroker has a completely transparent charge structure so that you can make an informed decision without having to worry about unexpected expenditures and hidden charges. 

Which Home Loan is the Most Beneficial?

When it comes to finding the best house loan for you, it all comes down to what you need. Your chances of getting a mortgage are much improved by applying for the proper loan form, which is tailored to suit your specific financial needs. The loan elements are also influenced by the RBI and lender-set home loan laws. Restricting the loan-to-value ratio to a maximum of 90% is an example.

Current interest rates and loan conditions are also included in these agreements. A home loan eligibility calculator may also help you determine whether you are eligible for a loan. If you want the most outstanding house loan, you need to find the proper form of loan, look at its benefits, and contact the best lender.

Finally, bear in mind that there are only two kinds of house loans: fixed-rate and adjustable-rate when it comes to interest rates.

Fixed-rate Home Loan: A home loan with a fixed interest rate gives you the security of knowing your monthly payment strictly.

Floating-rate Home Loan: This allows you to take advantage of lower interest rates when they occur. On the other hand, interest rates might rise as a result of current market circumstances.

Various banks have different interest rates for different types of house loans. But, on the other hand,most banks charge between 8.2 percent and 11 per cent in interest.

A more excellent grasp of what a house loan is can allow you to make a more informed decision about how to satisfy your current and future housing demands. One should also know the different types of home loans to go for the one that suits your requirements. Wish to learn more about buying houses? Flip through our blog section on Property. If you require some advice regarding buying a home, our NoBroker real estate experts can help you make the right decision.

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