A home is one of the biggest assets which any individual would normally buy during their lifetime. For most of us, buying our own house is a dream come true. An ‘owned house’ is your ‘own place’ in this world. Home is where you return and find comfort after all your struggles, tryst and triumphs. The wide majority of people opt for a home loan when they finalize on their property. Very few are able to buy a home with complete down payment and no loan. In today’s article we will explore all home loan products which are available in India.
1. Regular Home Loans
A regular home loan can be availed to purchase a new house or property. Generally, lenders offer 80% to 90% of the actual property value as home loan. The interest rates can be fixed or floating. The repayment tenure is normally available up to 30 years.
2. Flexipay Home Loans
Flexipay home loans offer borrower, the option to pay only interest during the moratorium (pre-EMI) period and then pay moderated EMIs. The EMIs increase during the subsequent years. This product is useful for young home buyers as they can pay only interest in the initial years and as their income increases over the years, they will be able to pay more amount towards EMI’s.
3. Pre-approved Home Loans
In this product, the lender provides pre-approval or sanction of home loan limit to the customer before a property is finalized. This helps the borrower to search and select a property which will fit in his/her budget as the pre-approved home loan limit is known beforehand. The borrower can also negotiate better with the builder/seller when a pre-approved loan amount is available as a reference point. The loan eligibility is assessed based on income details of the applicant.
4. Home Loan as Overdraft
Home loan is sanctioned as an Overdraft facility. The customer can deposit surplus funds in the home loan account. The interest will be charged on the loan amount remaining after deducting the surplus funds. This product helps to make large savings in interest in the long term although the interest rates are slightly higher than the normal home loans.
5. Home Loan linked to Insurance
In this product, home loan is linked to life insurance. It provides life cover to the borrowers for a specific period. The lender funds the premium of the life insurance policy. The repayment is spread over the loan period in monthly instalments.
6. Top-up Home Loan
The borrower can borrow a certain amount over and above their existing home loan. These loans can be taken for any personal purpose. The interest rates are much lower than usual personal loan interest rates.
7. Bridge Home Loan
This product is designed for people who want to buy bigger houses or move to a different location by selling off their existing home. The bridge loan helps to cover the shortfall of funds that may happen due to time lag between sale of existing property and purchase of a new one. The repayment of loan can be done up to two years.
8. Home Loans for Armed and Defence Personnel
Some lenders have special home loan products for Army and Defence employees. These loans generally have lower interest rates and other added benefits like ease of repayment options, longer repayment period etc.
To conclude, there are many types of home loan products available in the market. You should choose one which meets your requirements and is the most suitable for you.
