Home Loan Types and Options in India – Eligibility, Interest Rate and Calculator
Banks, HFC (housing finance companies) and NBFCs offer different types of home loans to suit customer needs. An individual can opt for a home loan to purchase a house, plot, or renovate. Lenders also offer home loan balance transfer and top-up facilities, which are like add-on products intended to help customers.
In this blog, we have listed down the types of house loans available in India so that you can make an informed decision while applying.
Types of Home Loans Available in India
Following are the different home loan types you can avail of:
1. Loan for New Home
A new home loan is a loan you can avail of to purchase a new house or property. Most lenders offer 70% – 90% financing of the actual property value. The interest rates usually start from 8% p.a. but could vary depending on your credit profile.
The repayment tenure usually extends up to 30 years. Consider calculating the home loan EMI beforehand to gain better insights on your financial conditions.
2. Home Improvement / Renovation Loan
Individuals who own a house but do not have the financial capability to renovate it can avail of a home improvement loan. Renovation may include repairing an existing property, re-painting walls, installation of new light fixtures, an extension of the house and more.
Here’s how the loan works: The borrower shares a cost estimate of the work intended to be done with the lender, who will take a quotation from the contractor to verify the estimate submitted. The money is released at the rate of the construction work to the contractor to whom it is due.
3. Home Construction Loan
Home-construction loans are designed for individuals who wish to construct a residential property on an owned/co-owned piece of land. In this case, the amount of loan that a financial institution can sanction depends upon a rough estimate of the construction cost.
4. Home Extension Loan
A home extension loan is handy for an individual who wishes to extend their house structurally in any form. Any eligible person, individually or jointly, can apply for a house extension loan from banks and NBFCs.
Borrowers with a home loan can get a house extension loan from the same lender as an add-on to their existing loan. Home extension loans are cheaper and carry lower processing charges. Furthermore, they are easy to obtain and offer tax benefits to borrowers.
5. NRI Home Loan
This type of home loan is specifically designed for non-resident Indians who want to purchase a residential property in India. The application process and the documentation are different from those of the other home loan types available in India.
6. Plot Loan
A plot loan or land loan is specifically meant for plot or land purchase. You can use the loan amount to buy a piece of land, which you can use for commercial or personal purposes.
7. Home Loan Balance Transfer
Home loan balance transfer is a facility that lets you switch your existing home loan to a new home loan account at reduced interest rates. You can apply for a home loan balance transfer in case you’re not happy with your existing lenders services and fees.
8. Home Loan Top-up
In case you have an ongoing home loan but need additional funds to renovate or repair your house, you can opt for a home loan top up. The best part is that home loan top-ups don’t come with end-use restrictions, meaning you can use the amount to meet any financial requirement. It works more like a personal loan but with a lower interest rate.
Interest Rates of Different Home Loans
Here are the interest rates of various housing finance options:
| Type of Loan | Interest Rate (p.a.) |
| Home Loans | 8% onwards |
| Home Construction Loan | 9% onwards |
| Home Improvement Loan | 8% onwards |
| Home Extension Loan | 9% onwards |
| Plot Loan | 10% onwards |
| NRI home loan | 8% onwards |
| Home Loan Baance Transfer | 8% onwards |
| Top-up Home Loan | 8% onwards |
With Navi, you can get home loans up to Rs. 5 crore in a 100% paperless manner and at attractive interest rates starting from 8.39% p.a.
Calculate your Home Loan EMI
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Loan Tenure (Years)
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Documents Required for Different Types of Home Loans
The documents required for each type of home loan are not the same. However, individuals might need to submit these if they opt for any type of housing finance option:
- Age Proof
- Proof of Address
- Duly signed application form with photograph
- Income-related documents (salary slip, ITRs, etc.)
Here’s a tabular representation of the additional documents required for each of the different types of home loans:
| Type of Loan | Documents |
| Home-purchase loan | Documents of the propertyExisting loan documents |
| Home-construction loan | Property-related documentsExisting loan documents |
| Home-improvement/renovation loan | Original property ownership documentsThe estimated cost of renovation |
| Land-purchase loan | Property-related documentsExisting loan documents |
| NRI home loan | A valid work permitProof of current overseas residencePassport and copy of work visaA general power of attorney |
| Bridge loan | Bank statement representing the repayment of the existing loanProperty-related documents |
Eligibility Criteria for Different Home Loans
Please note that the eligibility criteria for various types of house loans may vary depending upon the lender.
Here is a tabular representation of the basic parameters:
| Parameters | Likely Eligibility Criteria |
| Age of the applicant | 18-65 years |
| CIBIL score | 750 and above |
| Work experience of salaried professionals | At least 2 years |
| Business vintage (for self-employed individuals) | At least 5 years |
| Minimum salary | Rs. 25,000 |
| Nationality | Indian |
How to Apply for Home Loan?
Follow the steps below to apply for a home loan:
- Step 1: Visit the lender’s home loan app or website.
- Step 2: Enter a few basic details like your name, DoB, employment details, etc.
- Step 3: Complete your KYC verification.
- Step 4: Check your loan eligibility.
- Step 5: Select the loan amount and tenure to apply.
Note that the loan disbursal could take some time and involves extensive verification of property-related documents.
Final Word
It is crucial for prospective borrowers to do their fair share of research about different types of home loans available in India. This will help them select an option that is best suited for their financial requirements. However, they should also compare the interest rates and the EMI options charged by different lenders before making a decision. Download the Navi app and check out the EMI calculator to see what option suits your repaying capacity.
FAQs
Ans: Individuals can compute their home loan EMIs easily using a home loan EMI calculator. After entering the loan amount, tenure, and interest rate, the EMI will be displayed on the screen.
Ans: Usually, required documents, in this case, are sale deed, most recent tax receipts, clear and marketable title, possession certificate, and occupancy certificate. Also, they need to submit building plan approvals.
Ans: An amortization schedule is a table that provides all details in relation to the home loan. It lays out the interest and principal components of each EMI payment. Such a chart is provided by the home loan provider.
Ans: Your credit score and monthly income majorly determine your eligibility to apply for a home loan.
Ans: You need to check with the lender for your query. However, with Navi, you could simply download the app and enter basic details such as your name, DOB, and PAN to check your eligibility.
Before you go…
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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