In the top 8 cities of India, hoome loan unit sales registered a Q-o-Q growth of 84% in the last quarter of 2020, a Knight Frank India report said. The number is also slated to increase in the upcoming years, thanks to the affordable home loan interest rates and increased demand.
Nonetheless, several types of home loans are available in India, and intending home buyers often get confused when choosing the right type of credit for themselves. Hence, it is crucial for them to compare different variants to make an informed decision.
Best home loan types available in India
Following are some of the most popular housing loan options that individuals can consider opting for.
- Pradhan Mantri Awas Yojana
In 2015, the Government of India launched a scheme with a motto, “Housing for All”. This Credit Linked Subsidy Scheme (CLSS) offered under PMAY is targeted to alleviate the burden of loan repayment for the financially weaker section of society. Almost all financial institutions, including NBFCs, offer home loans under this scheme.
The subsidised home loan interest is available on constructing and acquiring a property located both in urban and rural India. Due to lower home loan interest rates, PMAY eases the way to becoming a homeowner.
- Balance transfer home loan
Existing borrowers can shift the outstanding home loan balance to a new lender and enjoy the best home loan interest rates. Besides reduced rates, home loan refinancing also allows individuals to leverage improved terms of service.
Hence, by opting for a home loan balance transfer, individuals can lower their EMIs to a great extent and save substantially on the interest payment. However, they should also consider the charges associated with this facility before opting for it.
- Top-up loan
A top-up loan is an amount available over and above an existing home loan that individuals can avail when they opt for a balance transfer. Based on their home loan eligibility, individuals can avail a substantial amount as this additional credit on top of their existing loan amount.
Since this loan does not have any restriction on end-use, borrowers can utilise the funds for variegated purposes besides home-related expenses.
Top financial institutions offer high value top-up loans when borrowers opt for a balance transfer. They can resort to a home loan interest rate calculator to estimate how much they can save by opting for this facility.
Leading HFCs also extend pre-approved offers to existing borrowers that simplify the loan application process. Such offers are available on various financial products like loans against property, home loans and many more. You can check your pre-approved offer by providing a few basic credentials like name, mobile number.
- Joint home loan
You can opt for a home loan with your spouse, sibling or parent and avail lowest home loan interest rates. When you purchase a property with a co-borrower, you can share the liabilities as well. Eventually, it reduces the loan burden to a great extent.
Another perk of availing this credit is that you can claim tax benefits on a joint home loan.
- Home improvement loan
Financial institutions offer credits for renovation, extension and to facilitate repair work of the home already purchased. Using the funds, borrowers can undertake the following jobs –
- Painting the house
- Change the flooring
- Purchase new furniture
- Fix a leaky roof
Besides, they can also finance other home-related expenses with the help of this credit.
Regardless of the type of home loan chosen, you should use a home loan interest calculator to optimise repayment. You should also compare different lenders before settling for any one option.
