Home Loan

Do you know there are Different Types of a Home Loan?

There are many various kinds of home loans available, and the one you choose should be based on your individual requirements. Lenders offer a wide variety of home loans so that they can meet the requirements of a diverse range of potential borrowers. Therefore, before you decide on a certain type of mortgage for your home purchase, it is in your best interest to evaluate your needs and select the product for a 15 Lakh Home Loan that best meets those needs.

Regular home purchase loan

The purchase of a property is typically the purpose of not just big but even the small 10 Lakh Home Loan that is requested by some people. In most cases, the purchase of ready-built property, property that is currently under construction, as well as pre-owned residences and resale property falls under this category. Homebuyers who have completed the purchase of a property can then approach an appropriate lender to apply for this 15 Lakh Home Loan. Make sure that you have the required amount of the down payment saved up or otherwise organised in accordance with the LTV ratio that the lender is offering. According to the standards established by the RBI, lenders are permitted to offer an LTV ratio of up to 75–90 percent. This indicates that the borrower is required to contribute a downpayment of at least 10–25 percent of the total cost of the property.

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Funding for the construction of a home

Home construction loans are available for the aim of building a house or other residential property on one’s own, as the name of the loan product would imply. Borrowers who already own a piece of land and are in need of funds for the financing of the construction of residential house property on that land are good candidates for this product. Instead of acquiring a home that is already completed or ready built, the borrower who obtains this 10 Lakh Home Loan will have the opportunity to build a house that is tailored to his or her individual requirements and preferences. The funds from this 15 Lakh Home Loan are typically distributed piecemeal rather than all at once. The manner in which these payments are made is contingent on the level or stage of construction.

Home improvement or a renovation or extension loan

Lenders frequently make available financing in this particular subcategory of house loans for the purpose of making enhancements or alterations to residential property that is already in the borrower’s possession. The funds are versatile and can be put to a broad variety of uses, such as remodelling, upgrading, repairing, flooring, tiling, painting, and other home improvement projects. According to the guidelines established by the RBI for the LTV, or loan to value ratio, lenders are permitted to cover the total cost of the renovation when providing funding for the costs associated with home improvements. This is provided, however, that the loan amount does not exceed 75–90 percent of the house property’s current market value.

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Homeowners who want to make improvements to their current residential house property, such as a new room, floor, or other feature, are eligible for a home extension loan. Again, in accordance with the standards established by the RBI, lenders typically fund between 75% and 90% of the construction estimate, with the exact percentage varying according to the amount of the 15 Lakh Home Loan and the LTV ratio.

Smart interest loan

A number of financial institutions have started providing mortgages that are typically associated with the borrower’s bank account.

Because the interest is calculated by deducting the monthly average balance in the linked account from the outstanding principal of the 10 Lakh Home Loan, depositing your excess funds in this linked account would assist in maximising the benefit of this home loan category. This is because the interest is calculated after deducting the monthly average balance in the linked account from the principal that is still owed on the home loan. Additionally, borrowers are often permitted to withdraw or deposit funds from this account on an as-needed basis, which helps ensure that there is sufficient liquidity in the system. Keep in mind, however, that the interest rate that is offered on this type of loan is typically a little bit higher than the interest rate that is offered on standard home loans.

Step up a housing loan

Because of limitations on their income, young salaried individuals who are just starting out in their careers frequently find that they are unable to qualify for larger house loans, which in turn decreases their entire loan eligibility even for small loans like 10 Lakh Home Loan. Some lenders have begun offering step-up house loans, which are mortgages with a repayment plan that is designed to be manageable for borrowers in their early earning years. This home loan’s EMI repayment is structured in such a way that, taking into consideration the brighter scope of expected growth in income of such individuals, the borrower is required to pay moderated EMIs in the initial years, after which the EMIs would be stepped up in subsequent years of the loan’s tenure. 

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This home loan’s EMI repayment is structured in such a way that, taking into consideration the brighter scope of expected growth in income of such individuals. By selecting this loan product, young salaried individuals have the opportunity to obtain a larger than 15 Lakh Home Loan amount, which is predicated on the assumption of future income development. Borrowers may also have the opportunity to repay solely the interest component of the loan during the moratorium (Pre-EMI) term.

However, when applying for a step-up loan for a 10 Lakh Home Loan amount, it is essential to keep in mind that in the event that one’s future income does not increase in accordance with their projections, the process of repaying the loan may become challenging in subsequent years of the loan’s tenure, when the amount of the EMI will have increased.

So, now you know some of the other non-regular home loans which can be useful if your financial requirements match their product features!

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