Home Loan Options For Buyers in India

We know that property prices have soared exponentially in the past few decades. Buying a home without a loan is impossible for most given the prices of property these days. Not everyone can shell out lakhs or crores to purchase a home. Home loans are by far the most important factor contributing to the boom in the real estate sector today.

A home loan is a financial loan a homebuyer avails from a bank or a financial institution to purchase a property. The loan is disbursed after the borrower meets the required prerequisites like eligibility and credit scores. The loan must be paid back in the form of equated monthly installments (EMIs) by the borrower to the bank. The bank charges an interest on the loan which is added to the loan amount and the total amount is divided into EMIs.

Home loans have bridged the gap between the dream of owning a home and buying it. It is also a thriving business for banks as well as a blessing for real estate companies and home buyers.

Let us look at the home loan options available today for buyers in India:

1. Basic Home Loan

The basic home loan is the most common type of home loan available to finance the purchase of your home property. A financial institution like a bank disburses 80 to 90% of the property price if the necessary criteria set by the bank are met by the borrower. Factors like the borrower’s income, credit score, and personal records are checked before disbursement of the loan. The property condition and the developer’s details are also verified.

2. Home construction loan

If the borrower owns a piece of land and wants to construct a home on the land they can avail the home construction loan. The construction costs are evaluated before the loan amount is decided and disbursed. In this case, the bank disburses the loan amount in installments as the construction work progresses.

3. Home Improvement Loan

This type of home loan is availed by borrowers who own a home and wish to renovate or extend their homes. Constructing or reconstructing the existing structure, making design improvements and renovations, or conducting repairs and maintenance are some of the exercises carried out by homeowners. The maximum home loan that the borrower is eligible for depends on their income and loan amount.

To avail of a home loan successfully, the borrower must have all their documents in place. A healthy credit score instills confidence in the bank to receive repayment of the borrowed loan. If the criteria are met, then the loan disbursement is faster. Home buyers should check if the project where they are buying a home is preapproved for home loans as many projects have tie-ups with large banks and financial institutions for home loans.