Which type of home loan is best?

Which type of home loan is best

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A home loan is a long-term commitment for a tenure upto 30 years and is also available for one of the most significant decisions of our lives, i.e. having a house of our dreams. Considering how it affects our budget for the long term and the impact it makes to our lives, the decision significantly demands rigorous thinking & decision making.

So, below-mentioned are different types of home loan that you can avail based on your varying needs & requirements.

1. Regular Home Loan: A home loan is a secured loan that can be availed against the mortgage of the property to buy or construct a house Banks & Non-Banking Financial Institutions (NBFCs) provide a home loan for upto 90% of the value of the property. Borrowers can get a home loan on both fixed & floating rate of interest. However, presently most of the lending institutions provide home loan on floating rate of interest. These home loans are linked to external bench marking such as repo rate. With the decline in repo rate, the home loan rates have thus dropped significantly, which is one crucial reason why you should consider availing a home loan now.

2. Home Construction Loan: As against a home loan, a home construction loan can only be availed against the mortgage of property on which one wishes to construct, for instance, building a floor on the existing house. This home loan product can also be availed upto 90% of the value of the property depending on the estimated cost of the construction of the house.

3. Loan for Land Purchase: If you want to purchase land or plot, loan for land purchase or plot loan as it is called can be your choice. In case you want to construct the house on a similar plot, you can also avail plot +construction loan.

4. Home Improvement Loans: A lot of financial institutions are also providing special categories of home loans specifically designed for improving or renovating your house. Along with that, there are home extension loans to extend or expand a place of your choice.

From where & how can you avail a home loan?

There are a lot of options available in the market to avail a home loan. However, every borrower wishes to avail the loans at lowest interest rates. Thus, that being said, one must compare the home loan rates of multiple lending institutions before availing a home loan. One of the best ways to do that is to avail a home loan from an online marketplace like MyLoanCare.

Along with the home loan rates, do not forget to check other charges like processing fees, home loan prepayment & foreclosure charges etc. as they would affect the cost of a home loan significantly.

Once you have done that, you need to check your home loan eligibility. Using an online home loan eligibility calculator can help you to calculate the eligibility and save time & errors. To improve your home loan eligibility, you can consider availing a home loan with a co-applicant, probably who have a high credit score or a woman borrower. 

Finally, collect all the home loan documents well in advance to avoid rejection of home loan application. 

Home Loan Rates of Top Banks in the country:

Below-mentioned are home loan rates of leading banks in the country.

Bank Home Loan Rate Processing Fee
SBI 6.95% 0.20%
HDFC 6.90% 0.25%
Citibank 6.75% NIL
Bank of Baroda 6.85% Min ₹ 7,500
ICICI Bank 6.90% 1.00%

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