If you desire to buy your dream home or fund other home-based needs, it is a good idea to apply for a loan. It is because a loan lets you avail of a large amount that you can repay over a longer tenor.
You can enjoy the great flexibility and affordability of a loan. But, it is equally important to know what type of loan suits you. You should check the loan amount, rate of interest, tenor and other features before deciding one of the types of home loans.
Once you choose one of the best types of home loans, you will align it with your expectations the best.
On that note, let’s check out different types of home loans suiting diverse requirements! Read on!
Types of home loans in India at a glance
1) Home loan
A home loan is the default choice if you wish to buy a residential property. The loan amount can also be used to build a new home on land you already own. It is also possible to buy a piece of land and construct a new home. The funds can also be used to renovate a home or re-build it. A home loan is among the most applied loans in India.
2) Home construction loan
As the name suggests, a home construction loan is to help you build your dream nest from scratch. You may get the disbursal in instalments or one-shot as per your lender’s policies. When you go for a home loan applying of this type, the amount credited depends on a rough estimate of the construction cost.
3) Home loan balance transfer
When the home loan interest rate falls, a lender may not pass on the benefits to you. Thus, you can switch your loan account to a lender offering a lowered rate. It helps you to lessen your home loan burden and also enjoy a larger amount in top up loan. If you are during the initial phase of your home, it is a profitable move. It is because, this time, the interest part of your EMI is higher. Your savings may be hard to notice if you transfer the loan during the end of the tenor.
4) Land purchase loan
A land purchase loan lets you invest in a piece of land. If you have a good deal in your hand, you can avail of this loan and make a significant investment. Once done, you are free to choose land and start the construction. It is when you have the funds or when you want to begin. What’s more, it is also possible to buy only the land without any plans to indulge in any construction work.
You are now aware of the different types of home loans. Depending on your needs and other factors, you can decide on one and apply online.
A home loan is a unique solution. Not only does it let you get a larger amount, but it even helps you save. It is in the form of home loan tax benefits.
Depending on the type of repayments like principal and interest, you can deduct up to Rs.2 lakh. The exemption could be deducted from your total income to help you save on tax payments.
You also get exemptions of up to Rs.2 lakh on interest/principal on a joint home loan.
Both applicants who must be co-owners are eligible to claim the perks separately in ITRs.
You can also use the home loan tax benefit calculator online. This tool lets you know about your estimated tax savings on home loans.