Buying a house is a lifelong dream for many, but financial responsibilities often delay it. To make it happen, people usually turn to banks or housing finance institutions. The common mistake, though, is assuming there’s only one kind of home loan. In reality, there are five different types — each meant for a specific purpose. Here’s what you should know about them.
A home loan usually helps you buy a ready-to-move flat or house. Banks typically finance up to 80% of the property’s value, and in some cases, even 90%. With repayment tenures ranging from 20 to 30 years, the EMIs remain manageable and affordable for most borrowers.
A home construction loan is ideal if you plan to build your own house. If you apply within a year of buying the plot, the loan can also cover the land cost. This option allows you to finance both the plot and construction expenses under a single loan.
A home improvement loan is perfect for repairs, renovations, or upgrades to your existing house. Whether it’s painting, remodeling, or adding a new kitchen, banks offer these loans easily since the property is already in your name.
A home extension loan is meant for expanding your existing house. It’s ideal if you plan to add a new room, a floor, or extend the living space. Simply put, this loan helps you increase the size and comfort of your current home.
A bridge home loan is a short-term loan designed to help when you’re buying a new house but haven’t yet sold your old one. It bridges the financial gap, ensuring you don’t face a cash crunch during the transition. Typically, banks offer this type of loan for up to two years.
Can you take two home loans? Yes, you can — especially if you apply jointly with your spouse or a family member. When both applicants have steady incomes and good credit scores, banks are willing to offer higher loan amounts. Your CIBIL score, which ranges from 300 to 900, is key here. A score above 750 makes it easier to secure loans at lower interest rates. Banks like SBI also offer attractive introductory rates. To keep your credit score healthy, always pay your bills and EMIs on time.
Before applying for a home loan, there are a few basics you should know. You’ll need to fill out an application form with details like your name, phone number, pin code, and occupation. Essential documents include copies of your Aadhaar, PAN, voter ID, and driving licence, along with address proof such as your electricity, water, or mobile bill. Once these are ready, you can approach your bank and begin the home loan application process.
