Types Of Home Loans

Home loans can be home equity loans or mortgage loans. Home Loans are of various types. You should have enough knowledge on the various Home Loan options available, before applying for one.

Home loan refers to a mutual agreement between the borrower and the lender in which the borrower purchases a property and the lender keeps the same property as the security for the amount borrowed by the borrower. There are different types of home loans available in the market and you should have the enough knowledge about different kinds of home loans before applying for one. 

These are the different types of home loans that are presently available in the market: 

Home Purchase Loans 

These are the basic type of home loans used for purchasing of a new house.

Home Improvement Loans 

These loans are given for implementing repair works and renovations in a house that has already been purchased by the customer. 

Home Construction Loans 

These loans are available for the construction of a new house. 

Home Extension Loans 

These loans are given for the expansion of an existing house of a customer. For example: addition of another room in the house, etc. 

Home Conversion Loans 

These loans are available for those who have already financed their existing house with a home loan and wish to buy and move to another house for which some extra funds are required. 

With home conversion loan, the existing loan of the customer transfers to the new house that includes the extra amount that the customer requires. This eliminates the need of pre-payment of the previous home loan that the customer borrows. 

Land Purchase Loans: These loans are available for purchasing land for construction. This type of loan is also available for the investment purpose.

Bridge Loans: You can take bridge loans, if you wish to sell the existing house and purchase another one. The bridge loans help in financing the new house, until a buyer is found for the new house. 

Eligibility For Taking Home-Loan 

The person who is of 21 years or above is eligible to apply for a home loan but he must have a regular income. 

There are certain documents that a salaried person has to submit to the bank to get home loan. Documents that a bank needs to sanction your home-loan include:

An Application form with a photograph 

Identification proof and Residence proof 

Current salary slip 

Form16 or Last Income Tax Returns document 

Last 6 months or annual bank statement 

Processing fee cheque 

Maximum Loan And Maximum Term Of The Home Loan 

Maximum loan is 85 % of the cost of the house and it is also based on the repayment capacity of the customer. 

Maximum term for home loan is up to 20 years, and is also calculated keeping in view the retirement age of the customer.