Types of Home Loans Available in India

Types of Home Loans Available in India

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There are other types of home loans – apart from home purchase loans – that you can seek. We list the most preferred ones from leading housing finance companies.

It’s a dream that almost every person has…to own their own home, and to design it the way they wish. For some, it is enough to buy an apartment in a block of luxury flats. Others want to buy ready villas on the outskirts of the city. Still others want to buy a plot of land and build a lavish bungalow on it, with a garden in the front and a children’s play at the back.

Whatever the size and location of your dream home, you are certain of finding the right housing finance solution for it. Contrary to popular opinion, housing finance is available not just for buying a ready apartment, but also to buy a plot of land, or to extend an existing house, or even to conduct urgent renovation and repairs.

If you need the necessary home loan, start by researching the loan products offered by leading housing finance companies like Punjab National Bank Housing Finance Limited (PNBHFL). PNBHFL offers the following home loans:

  • Home purchase loan. These housing loans are offered for the purchase of ready or under-construction homes in India.
  • Home construction loan. This category of loans is offered to applicants wishing to build a residential house on their owned plot of land.
  • Home extension loan. These loans allow home owners to increase the size of their existing homes. They can create an extension on one or more parts of it. The loan is granted subject to municipal permissions being taken and the home owner submitting the timelines for the project. The loan can help you build an extra room or floor, or construct additional storage, or increase the size of a current space.
  • Home improvement loan. Those wanting to renovate their homes or carry out urgent repairs can avail of home improvement loans. This loan lets you repair the walls and internal services, or improve the existing amenities, do complete electrification and waterproofing, etc. using the loan money.
  • Residential plot loan. This kind of loan helps you buy a plot of land (marked on the municipal Development Plan as a ‘residential reservation’ only) in an urban area.
  • NRI loan. NRIs wanting to invest in India-located properties can do so by taking NRI housing loans. NRIs can also seek loan against property for any India-based property to their name.
  • Unnati home loans. These are small loans offered at lower housing loan rates. Applicants get the chance to select the fixed housing loan rate of interest for 3, 5 or 10 years.

How to avail of the right kind of home loan

Most often, the application and documentation process for every category of home loan in India remains the same. Whether you apply for a house purchase loan or a residential plot loan, you must still follow these steps:

* Check your eligibility. This is the first step in applying for the loan. Check your home loan eligibility basis your annual income, age, current liabilities, city of residence, etc. An online home loan eligibility calculator can indicate your eligibility in real time, so you can proceed for the loan application process accordingly. The home loan calculator provides the closest approximation to the actual loan eligibility – check with the housing finance company for the exact figure.

* Check the list of home loan documents required. Every housing finance company has a set documentation process. You can check the housing finance company’s list of home loan documents required from their website. Documents normally asked for include your personal documents (age proof, permanent address proof), income documents (salary certificate, IT returns filed for at least last two years, etc.) property papers (sale agreement, municipal permissions, chain of agreements from first to current owner, land title clearance, etc.)

* Understand the application process. The housing finance company will study the list of documents that you submit. Each detail is also cross checked independently through legal evaluations. The property is also vetted thoroughly, after which the evaluator presents a proposal for approval or rejection of the application. At this stage, the lender will give a final figure for your home loan eligibility, which may even be higher than the loan amount that you seek. Once your application is approved, the lender starts preparing the loan agreement papers and the disbursal cheque.

* Ask about the processing charges and other fees. The lender will have an entire schedule of fees that they can explain to you. It normally includes application charges, legal evaluation fees, pre-EMI payment and stamp duty on the loan agreement. Do inquire about their foreclosure charges in case you close the loan before its tenure is up – these are applicable on most home loans except for home purchase loans.

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