A home loan is our gateway to owning a home someday. And with growing popularity and competition amongst lenders for attracting prospective homebuyers towards a home loan, there are many forms of home loan options available apart from regular home loans. These different types of home loans are aimed to cater to varying homebuyer needs.
So, before you zero in upon any category of home loan, it would be prudent to assess your requirements and avail the most suitable type of home loan:
Home purchase loan
The most common type of loan availed is for home purchase which caters to almost all requirements of homebuyers, also subject to their qualification for SBI Home Loan Eligibility. This category of home loan usually includes the purchase of ready built property, under-construction property and pre-owned homes/resale property. Upon finalization of property, homebuyers can approach a suitable lender to avail of this home loan. Make sure you have accumulated an adequate down-payment amount according to the LTV ratio offered by the lender and also the set criterion as per SBI Home Loan Eligibility.
Home construction loan
As the name suggests, home construction loans are offered for the purpose of self-construction of a residential house property. If you are eligible to take this type of loan as per the set criterion pertaining to ICICI Home Loan Eligibility, this product can turn out to be suitable for you in case you already own land and require funds for financing the construction of the residential house property on that land. Availing this loan enables the borrower to construct a home according to his/her needs and preferences instead of purchasing an already constructed/ready built one. The disbursement of this loan is usually in parts, instead of lumpsum, depending upon the level/stage of construction and conditions pertaining to ICICI Home Loan Eligibility.
Home renovation and extension loan
For improvement or modification of already owned residential property, lenders often provide this specific category of home loans. The funds can be utilized for a wide variety of purposes, such as renovation, up-gradation, repair, flooring, tiling, painting etc. While funding the cost involved in home improvement, lenders may fund the entire cost of renovation, provided the loan amount does not exceed the threshold LTV ratio set as per RBI’s guidelines and also the ones preset according to SBI Home Loan Eligibility.
As far as home extension loan is concerned, homeowners qualifying for
ICICI Home Loan Eligibility and also wishing to make additions to their existing residential house property, whether in the form of a new room, floor etc., can avail this.
Composite loan
A composite home loan is a combined loan for purchasing a plot and subsequent construction of your residential property on that plot within a specified period of time. Unlike other home loans wherein the loan amount is disbursed in a lump sum, a composite loan usually involves disbursement in parts. The disbursement is first made towards the purchase of the plot, and the subsequent ones take place based upon stages of construction of the house, similar to the disbursement process carried out in the case of SBI Home Loan Eligibility set for a home construction loan.
Bridge home Loan
A lesser-known category of home loans to which many existing homeowners might be unfamiliar is bridge home loans. Those who wish to upgrade themselves to bigger or better homes from the sale proceeds of their existing home property can opt for this loan. As homeowners often require more time to liquidate their existing home property, their new home purchase is often adversely affected due to the liquidity gap. Bridge home loans are exactly designed for this purpose, as they provide short term loan which bridges the liquidity gap, thereby enabling the homeowner to finance the new purchase and meanwhile providing enough time to get the best deal on the sale of existing home property. However, keep in mind that the interest rates of bridge loans are usually higher than those of regular home loans, and the tenure also involves very short, usually up to 2 years. Make sure you check whether you fit in ICICI Home Loan Eligibility before going ahead with the submission of a home loan application for any particular type of home loan. Doing so would assist you in striking the right home loan deal which is best for your financial health.
Smart home loan
Some lenders have been offering home loans that are usually linked to the borrower’s bank account. Those who qualify for ICICI Home Loan Eligibility can move forward and enquire with the lender regarding this home loan option and whether it would be suitable as per your repayment capacity and financial requirements. Depositing your surplus funds in this linked account would assist in maximizing the benefit of this home loan category, as the interest is calculated after deducting the monthly average balance in the linked account from the outstanding principal of the home loan, thereby resulting in interest saving. Moreover, borrowers are generally allowed to make withdrawals or put in the deposit of funds in this account as and when required. Thus, this ensures liquidity as well. But keep in mind that the home loan interest rate offered on this loan can usually be marginally higher than that of regular home loans.
Step up home loan
Young salaried individuals in the initial years of their career are often unable to avail themselves of higher home loan amounts due to income constraints, which reduces their overall loan eligibility. For such home loan aspirants, qualifying for SBI Home Loan Eligibility would make them eligible to avail of step-up home loans, whose repayment structure works well for young learners. Taking into consideration the brighter scope of expected growth in income of such individuals, this home loan's EMI repayment is a structure in such a way that the borrower needs to pay moderated EMIs in the initial years, post which the EMIs would be stepped up in subsequent years of the loan's tenure. Based on the expectation of income growth, young salaried individuals can avail of higher loan amounts by opting for this loan product. The option to repay only the interest component in the moratorium (Pre- EMI) period may also be available to borrowers.
However, while availing of step-up loans, it's important to keep in mind that in case the future income doesn't increase as per expectations and do not meet the set criterion mentioned according to ICICI Home Loan Eligibility, the repayment may become difficult in subsequent years of loan tenure when the EMI amount would rise.
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