Besides the regular home loan that we all know about, there are a wide variety of housing loans to pick from. And thus, making the right decision will depend on your specific financial situation and needs. Lenders tend to accommodate a broad spectrum of borrowers by providing a wide selection of housing loan products, including Home Construction Loan. Therefore, it is in your best interest to assess your requirements and choose the housing lender that best fulfils those requirements. So before settling on a specific sort of housing loan at Current Home Loan Interest Rates for your house purchase, let us have a look at some of the different types of loans available to choose from. This will assist you in broadening your choices, and who knows, you may end up getting the appropriate housing loan product that suits your financial health!
Loan to pay for a home’s construction
As the name suggests, a Home Construction Loan can be used to finance the construction of a home or other type of residential property. Candidates for this product include landowners who want to build a home on their property but lack the cash necessary to do so. This loan gives the borrower the option of custom designing and constructing a new home rather than purchasing a prefabricated or prefinished one. This loan’s money is often dispersed over several payments rather than all at once. Home Construction Loan payments may be made in a variety of ways, each of which is determined by the construction phase the home is currently in.
Loan for home betterment
Lenders in this sub-segment of Home Loans typically provide money for the borrower to fix up or improve a house they already own. The money can be used on everything from landscaping to new windows to new siding to new flooring to new paint on the walls.
A home renovation loan is available to homeowners who wish to add space to their existing homes by means of the construction of a new room, floor, or other feature. Any number of home enhancements qualify for this loan. Lenders normally fund between 75% and 90% of the construction estimate, with the actual percentage variable based on the size of the loan and the LTV ratio, as per the RBI’s regulations.
Composite housing loan
The Home Construction Loan is an analogue of this loan. When you take out a composite house loan, the funds you borrow will be used both to buy land and to build a house on that land within a specified time frame. A combined mortgage is another name for this loan structure. Unlike conventional mortgage loans, the funds for a composite Home Loan are often dispersed in instalments rather than all at once. Similar to how a home building loan is dispersed, the first payment goes toward the land’s acquisition, and subsequent payments are made dependent on the house’s construction progress.
Bridge housing loan
As a subset of mortgages, bridge loans are not as widely known as conventional mortgages, and even some homeowners may be unfamiliar with them. If you plan to sell your current house and use the money to buy a new, larger or better one, this loan may be an option to consider. The purchase of a new home is sometimes hampered by a liquidity gap since homeowners require more time to sell their current property.
The short-term nature of a bridge mortgage loan is ideal for this purpose since it serves as a stopgap measure until the borrower’s current loan matures. This gives the buyer time to sell their current house for the highest potential price while still being able to secure financing for their next home. Bridging loans, or “jump loans,” are short-term mortgages used in emergency situations. Keep in mind, though, that bridge loans normally feature higher Current Home Loan Interest Rates than regular house loans and a lifespan that is relatively short, usually ranging from one to two years. In comparing the two, please keep these points in mind.
Interest saving housing loan
Mortgages linked to a borrower’s bank account have recently become available from a growing number of financial organisations.
To get the most out of this house loan category, you should put whatever extra money you have into the linked account, as interest is calculated by subtracting the linked account’s monthly average balance from the home loan’s outstanding principal. This is due to the fact that the Current Home Loan Interest Rates here are determined by dividing the outstanding home loan principal by the average monthly balance in the linked account. Borrowers are also often given the flexibility to add to or take money out of this account on an as-needed basis, which further contributes to maintaining enough liquidity. However, keep in mind that the interest rate offered on this form of loan is normally a little bit higher than the interest rate offered on standard house loans.
Step up a housing loan
The inability to qualify for a larger Home Loan is a common problem for young salaried professionals at the beginning of their professions. This has the knock-on effect of reducing their overall loan eligibility. Step up mortgage loans, with a more manageable payment schedule, have been made available by some banks to borrowers in their early years of employment. The interest payments on this house loan are arranged so that the borrower pays lower payments in the first few years, and then the payments are gradually increased throughout the course of the loan as the borrower’s income rises. The Current Home Loan Interest Rates
applicable for payments on this house loan have been calculated so as to take into account the higher potential for an increase in income of such individuals. This loan product gives young salaried persons the option of borrowing more money based on the expectation that their income will rise in the future. During the prepayment moratorium (Pre-EMI) period, borrowers have the option of only making interest payments.