Different types of Home Loans
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Introduction
In this article I will be writing about the different types of home loans. If you take any product in the market, there will be multiple options to the customer. In home loans aswell depending on the needs, customer can choose the type of loans whether it can be home improvement loans, home loans, etc. This article will explore more about the types of home loans and the difference amoung them. In our previous articles we have covered many types of home loans, if suitable I will link back to the older article . I would like to hear feedback from you after reading the article. Please post it in the comments section. You can subscribe to our future articles here.
Home Improvement Loans
I have written a detailed article on the home improvement loans. Typically home improvement loans are used for extending the existing homes like constructing balcony, kitchen or even you can use that money to paint your house or beatification work. It will be just work like the home loans when in the home loans you will have to work with builders here the money goes to construction contractors. To avail the home improvement loans first you have to estimate the amount required for extending the house and then submit the plans to your financier(bank). They will be verifying with the constructors about your estimation and visit your home. Some banks will sanction the loan only if you submit the receipts of payment to the contractors. You can learn more about Tax Benefits on Home Improvement Loans. The following are coming under the home improvement loans:
- External repairs
- Tiling and flooring
- Internal and external painting
- Plumbing and electrical work
- Waterproofing and roofing
- Grills and aluminum windows
- Waterproofing on terrace
- Construction of underground/overhead water tank
- Paving of compound wall (with stone/tile/etc.)
- Borewell
Home Extension Loans
Home Extension Loan makes it convenient for you to extend or add space to your home. Be it an additional room, a larger bathroom, or even enclosing an open balcony. Some times the same applies to the home improvement loans. It depends on the bankers how they categorize the type of loans.
Short-term Bridging Loans
This kind of loans are taken while you are buying a new house by selling your old house. Some times you may take more time to sell your old house. In the interim period you can apply for this kind of loans to buy your dream home. Normally this kind of loans are given maximum of two years. As per the HDFC’s website, you can get the loans for 90% of the new property.
Land Purchasing Loans
If you wish to buy a plot of land, you can take this loan. You can get a loan for up to 85 per cent of the cost of land.Maximum term is 15 years subject to the retirement age.
Home equity loans
This is another way of seeking the loan. The loan amount can be used for any purposes other then illegal activities. For example if you have taken a home loan worth Rs.15 lacs for your new property, after some time the property value is increased and you have reduced the outstanding loan amount to Rs.5 lacs. This gives you chance for getting more loan amount for the same property as the security. Most people follow this approach to get the loan amount for the personal work like Mrriage,etc.
Summary
In this article I have written about the different types of home loans Home Improvement Loans, Home Extension Loans, Short-term Bridging Loans, Land Purchasing Loans. The type of the loans may vary on different banks. I have taken these details based on the HDFC bank’s home loans policies. But, most of the banks will have the same type of loans with minor differences. Thank you for reading the article!!!. I would like to answer your questions. Please post it in the comments section.
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14 Comments on this post
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Hemant said:
I just wants to know that if i take a land purchase loan will i get the tax benefit for the interest payment. I wants to buy a plot and will build that plot later.
April 8th, 2009 at 1:07 am -
krishnas said:
HI Hemant,
You will not get the tax benefits for only buying the plot of land. You can get the tax benefit if you are constructing the house on the land. In that case if you are getting the loan of Rs.100000 for buying land and later Rs.200000 for building the house on the land. In this case the entire Rs.300000 can get the tax benefits.
I hope this clears your doubts. If you have doubts please reply to this comment.
Thanks,
KrishnaApril 8th, 2009 at 1:25 am -
Sundar said:
I want to purchase a land and later built the house. Will I get loan?? If I get, is there any limitation for the time for commencement of building after buying a land? Will I get tax benefit for buying land??
August 16th, 2009 at 1:55 am -
Sundar said:
I want to purchase a land and later built the house. Will I get loan?? If I get, is there any limitation for the time for commencement of building after buying a land? Will I get tax benefit for buying land?? what are the securities required for getting loan for buying land??
August 16th, 2009 at 1:56 am -
krishnas said:
Hello Sundar,
You can not get the tax benefits if the loan is taken only for buying the land. But, you are also taking the loan for construct a house on that land, then the total loan will get the tax benefits.
Note that the tax benefits will be available only when you complete the construction.
Thanks,
KrishnaAugust 16th, 2009 at 2:03 am -
Sundar said:
are the interest rates same for both land loans and home loans?? What r the documents required for land loan?can u provide some tips on land loans? Thanks for ur prompt answers
August 16th, 2009 at 3:31 am -
krishnas said:
Hello Sundar,
The required documents would be different from the each banks. It is better to check with the bankers to know about more details. There won’t be any specific rate for the land loans itself. It will be combined with the home loans. You have to apply the home loans mentioning the cost of the land also. Then only you can get the tax benefits. You can check for the home loans details here:
http://www.icicibank.com/pfsuser/loans/homeloans/propoverdraft.htmThanks,
KrishnaAugust 16th, 2009 at 4:14 am -
satish ramachandran said:
I Would like to buy a plain agriculture land 12 acres. The cost is 24 lacs. Government value is 76000/- per acre.Woul dlike to get a loan of 10 lacs. Would like to know were can i get agriculture loan near hassan & what is the criteria.
thanks
November 16th, 2009 at 8:45 pm -
krishnas said:
Hello Satish,
Thank you for the comments. Please talk to the banker.
I don’t think there is any loans to for buying the land. You have to go for the nromal loans.Thanks,
KrishnaNovember 17th, 2009 at 11:12 pm -
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February 12th, 2010 at 12:50 am -
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June 23rd, 2010 at 8:17 pm
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