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17 FEBRUARY, 2022
Suchitra wanted to buy a house for herself. However, it was difficult for her to arrange the entire cost of purchasing a house property with her savings. Someone advised her to take a home loan to fund the house purchase. Convinced about the benefits of home loans, she started looking for a home loan. Unfortunately, having no knowledge of home loans, she was baffled to find their different types. It took her quite some time to understand the different options and then avail the one that fit her needs.
Here is the ultimate guide for types of housing loans that you can avail.
This is the most common type of home loan that you can avail to purchase a house property. You can take a home loan to buy a ready to move or an under-construction property. Usually, you can take a loan of up to 90% of the property value for either flexible or fixed interest rates. You can also avail tax benefits on a home loan.
Loans that can help you finance the extension, improvement or remodelling of your house are called home improvement loans. You can avail this loan to change the structure of your house or add in additional rooms. The funds from this loan can be used for work like painting, repairs, electric wiring, etc.
If you want to construct your house your way and not buy any property designed by builders, you can avail a home construction loan. This loan is for borrowers who have a plot of land and want to construct a house on it. To take this loan, you need to furnish a rough estimate of the cost that will be needed for the house construction. The amount of the home construction loan is not disbursed in a lump sum. You get the loan amount in various installments based on the progress of the construction of the house. Typically, lenders monitor the progress and disburse the next installments only when the previous construction phase is completed.
Bridge loans are for people who want to buy a new house but do not have buyers for their old house yet. Bridge loans are short-term loans that are available for two years. To avail a bridge loan, you need to keep the new property as a mortgage with the lender and find a buyer for the existing house within a stipulated time. If you fail to do so, the lender could consider it as a loan against property and charge a higher interest rate.
A house conversion loan can be helpful when you already have purchased a house on a home loan but want to buy a new house. When you avail a home conversion loan, the previous loan is transferred to the new house. You can buy another house without the need to repay the previous home loan.
The availability of different home loans can create confusion. To choose the one you need, you must assess your needs and requirements. Moreover, also ensure to check your affordability before availing any home loan.
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