What Are The Types Of Home Loan Options Available In India?

With the surging real estate prices in India, home loans are the ideal financing facility for aspiring homeowners. To further encourage home buyers, financial institutions are now providing different types of home loans to enable borrowers to fulfil their dream of owning a home. 

With Navi Home Loans, you can get financing of up to Rs.5 crore at attractive interest rates starting at 6.46% p.a. The paperless application process makes it much simpler for aspiring homebuyers to get loans with Navi.

Interest Rates of Different Home Loans

Here are the interest rates of various housing finance options:

Types of Home Loans Available in India

Loan for Land Purchase

Financial institutions provide loans for land purchases so that borrowers can buy a plot on which they want to construct a house. Tax deductions on land loans can be availed of only when the construction is completed. Usually, loan providers sanction up to 80-85% of the land’s market value, implying that borrowers have to pay the remaining 15-20% as a down payment. 

Home Purchase Loan

Borrowers can avail of a home purchase loan to finance the purchase of a new home. It is important to determine eligibility and repaying capacity before starting the home loan process. Your repayment capacity is based on factors such as total monthly income/ monthly expenses, and other factors like spouse’s income, assets, liabilities, stability of income, etc. One can get up to 80% of the residential property’s market value with this financing option. At Navi Loans, we offer up to 90% of the property’s market value as a loan. Download the Navi app today to apply for home loans up to Rs.5 crore.

Loan for Home Construction

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. 

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.

Home Conversion Loan

Individuals who have already availed of a home loan but want to sell the property and buy a new home can opt for a home conversion loan. By choosing this type of housing credit, borrowers can purchase a new residential property by transferring the existing loan to the new house. They do not have to repay the loan or seek another lender. 

However, note that this option is a bit more expensive in comparison to other types of home loans on this list. 

Home Loan for NRIs

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 types of home loans available in India. Nevertheless, the structure of this housing loan is similar. 

Bridge Loan

A bridge loan is a short-term financing option that homeowners can avail to buy a new residential property by selling their existing one. Individuals can utilise the loan amount to finance the purchase of the new home until they are able to sell the old property. Usually, bridge loans come with a high-interest rate and have a tenure of fewer than two years. 

Also read: Home Loans: Types, Interest Rates, How To Apply And Benefits

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: 

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:

With Navi, individuals can get approval on a home loan in less than 5 minutes via a streamlined paperless application process. Download the Navi app to know more. 

Also read:   Home Loan Sanction Letter: Sanction Process, Benefits & Documents Required.

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 charged by different lenders before making a decision. 

Frequently Asked Questions

Before you go… 

• Looking for instant  personal loans 24*7 anywhere, anytime? Install the Navi app now!
• Or, maybe you’re looking to buy that house you’ve been eyeing  and you need a loan of up to Rs. 5 crores. Install the Navi app now and get your instant in-principle approval right away! Interest rates starting at 6.40% p.a.
• How about an affordable health insurance policy  starting at a monthly premium of just Rs. 241? Install the Navi app and get your policy in under 2 minutes

• Instead, want to put your savings into action and kick-start your investment journey  But don’t have time to do research. Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.