Here is a cursory look at some of the popular types of home loans. It is just an introduction and is not a definitive guide.
- Land Purchase Loans
Land purchase loans are meant to help the applicant buy a plot of land, on which the applicant can then construct his house. Usually, the banks offer up to 85 percent of the original price of the land. These loans are provided to the applicants, both for residential and investment purposes. These loans are provided by many leading banks and can be availed easily.
- Home Purchase Loans
These are the most commonly available, hence the most popular home loan variants. These loans are provided to the applicant to help him or her buy a new residential property or an old house, from its previous owners. Usually, in this type of loan the finance provided is up to 85 percent of the market value of the respective house.
Such loans are usually offered on fixed interest rates or on the floating interest rates. Sometimes they are also offered as hybrid loans.
This type of loan is also provided by all the banking institutions and housing finance companies.
- Home Construction Loans
These loans are offered to those individuals who want to construct a house, rather than buying an already existing one.
The process of loan application and its approval is different for these types of loans as opposed to the commonly available housing loans.
One condition is the plot of land on which the house is to be constructed should have been bought within a year of the application, for the cost of the land to be included for the purpose of calculating the total price of the house. If the plot has been purchased more than a year ago, this clause is not applicable.
In this type of loan, the total amount is disbursed at one go or is done in several installments, depending on the stages of construction.