- For those planning to take a home loan, it is important to understand the various types available and determine which option aligns best with their financial requirements
- Home Purchase Loan
- Home Construction Loan
- Home Improvement Loan
- Home Extension Loan
- Bridge Home Loan
- Can You Take Two Home Loans?
- Application Process
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For those planning to take a home loan, it is important to understand the various types available and determine which option aligns best with their financial requirements
The loan tenure can span from 20 to 30 years, ensuring a lower EMI for borrowers. (Representative/Shutterstock)
Many people dream of buying a house, but due to financial responsibilities, they cannot fulfil this dream with their own income. This is where a home loan becomes a significant help. Contrary to popular belief, there are more than just one or two types of home loans.
In fact, there are five types of home loans, each offering distinct benefits. For anyone planning to take a home loan, it is crucial to understand which option best suits their needs.
Home Purchase Loan
The first type is the home purchase loan, designed for buying a new flat or a ready house. This option is ideal if one is purchasing a new property. Banks typically offer up to 80 percent of the property’s value, sometimes even 90 percent. The loan tenure can span from 20 to 30 years, ensuring a lower EMI for borrowers.
Home Construction Loan
The second type is the home construction loan, intended for building one’s own house. The plot cost can also be included, provided the loan application is made within a year of purchasing the plot. This loan covers both the plot and construction costs.
Home Improvement Loan
The third type is the home improvement loan, suitable for repairing or renovating one’s house. If anyone owns an older property and wish to paint, change the flooring, or build a new kitchen, this loan is beneficial. Banks readily approve this loan since the property is already in the borrower’s possession.
Home Extension Loan
The fourth type is the home extension loan, meant for expanding one’s existing house. If one plans to add an extra room or floor to their current home, this loan is perfect. It specifically caters to increasing the size of their residence.
Bridge Home Loan
The fifth type is the bridge home loan, which is somewhat different and serves a short-term purpose. If someone is selling an old house to buy a new one but the sale is delayed, this loan helps bridge the financial gap and ensures funds do not fall short. Banks usually offer this loan for up to two years.
Can You Take Two Home Loans?
Two home loans can be taken if a joint loan is opted for with a spouse or family member. If the co-applicant has a strong credit score and stable income, banks may offer a higher loan amount by considering both salaries. The CIBIL score plays a crucial role in this process. The score ranges from 300 to 900, and borrowers with scores above 750 can usually secure loans at lower interest rates. Banks such as SBI offer competitive starting rates. To maintain a strong CIBIL score, bills and EMIs must be paid on time.
Application Process
Before taking a home loan, several key details must be understood. An application form has to be filled out with basic information such as name, phone number, pin code, and job type. Required documents include copies of Aadhaar, PAN, voter ID, and driving licence. For address proof, documents such as an electricity bill, water bill, or mobile bill are accepted. Information can be obtained directly from the bank, and the home loan application can then be submitted.
November 06, 2025, 17:24 IST
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