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Home Loan

People generally take a home loan for either buying a house/flat or a plot of land for construction of house, or renovation, extension and repair to the existing house. The property is mortgage to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it. The interest rates can be fixed or floating, or partially fixed or partially floating, suiting the need of the borrower. There are also certain tax benefits available on your home loan under the Section 80EE of Income TAX Act. However, the Income Tax deduction can be claimed on home loan interest by first time home buyer only.

Types of Home Loans in India

  • Home Loan: This is the most common type of home loan availed to purchase a house. There are many housing finance companies, public banks, and private banks that offer housing loans where you borrow money to purchase the house of your choice and repay the loan in monthly instalments. You can get up to 80%-90% of the house’s market price in the form of financing. The lender will hold the house until you completely repay the loan.
  • Home Construction Loan: This is the right home loan type if you already have a plot of land and you need financing to construct a house in that land.
  • Home Extension Loan: Say you already own a house and you would like to extend the house with another room or another floor to accommodate the growing family. Home extension loan provides financing for this purpose.
  • Home Improvement Loan: A home improvement loan provides financing for renovating or repairing the house if there’s any fault in the existing system, such as painting the house’s interior or exterior, plumbing, upgrading the electrical system, waterproofing the ceiling, and more.
  • Home Loan Balance Transfer: The current home loan interest rate may be overwhelming, or you may not be happy with your current lender’s service; you can transfer the home loan’s outstanding balance to a different lender who offers a lower interest rate and better service. Upon transfer, you can even check out the possibilities of a top-up loan on your existing one.
  • Composite Home Loan: This type of home loan provides financing for purchasing the plot of land where you would like to construct a house and for the construction, both within a single loan.