Although there are many different types of mortgage loans, you should base your decision on the details of your financial situation and future plans. There are more than one or two distinct types. Lenders provide a range of house loans to meet the demands of a wide range of potential customers.
Before selecting a certain kind of house loan for the purchase of your new property, it is advised for you to first assess your needs. Choose the mortgage lenders whose deal best suits your needs after that.
Home construction loan
The house building loan is offered for the independent construction of a home or other residential property on a plot (even a HDFC Plot Loan can be taken for such purpose), as the name of the loan product would imply. The majority of program applicants are debtors who want to use the money to build a house on land they already own. Instead of purchasing a finished or ready-built property, the borrower who accepts this loan will have the opportunity to design a home that is unique to his or her own wants and interests. Rather than being paid off all at once, this mortgage is frequently paid off in a series of installments. There are various alternative ways to pay these mortgage installments, depending on the type of building or rate.
Home renovation housing loan
With this specific sort of mortgage, lenders frequently give borrowers money so they can upgrade or repair current residential property. The funds are flexible and can be applied to a variety of projects, such as home renovations, painting, remodeling, and tile installation.
Homeowners can apply for a home expansion loan to add a new room, floor, or other feature to their current residential property. Several home improvement projects could be funded with this money. The exact percentage depends on the loan amount and LTV ratio, however in order to comply with RBI standards, lenders often finance between 75% and 90% of anticipated construction costs.
Composite house loan
There are several similarities between this loan and the Home Construction Loan. A composite home loan provides money for buying land with the purpose of building a house on it later. The term “combination mortgage” is frequently used to describe this sort of financing. A composite house loan often disburses the loan amount gradually rather than entirely at once, in contrast to other types of mortgage loans. Similar to the disbursement process employed in the case of a home building loan, the initial payment is made toward the purchase of the plot like in case of HDFC Plot Loan, and future payments are made in line with the phases of the house’s construction that have been completed.
Bridge house loan
Homeowners might not be as familiar with bridge loans as they are with construction or top-up loans. You can use the sale proceeds as security for this loan if you want to purchase a property that is larger or better quality than your current residence. Since it generally takes longer for homeowners to sell the possessions in their previous dwelling, a liquidity gap frequently has a negative impact on the purchase of a new property.
The lack of project capital is more than made up for by the speedy financing provided by bridge mortgages. In addition to enabling them to finance the purchase of the new property, this allows the homeowner the opportunity to negotiate the greatest price for the sale of their current property. However, keep in mind that bridge loans usually have shorter terms (one to two years) and higher interest rates (based on HDFC Bank MCLR or other benchmarks) than regular home loans.
The process of “loan for rent discounting” (LRD Loan) is utilizing rental income as security to obtain a loan from a bank. The bank will consider long-term cashflow before approving a loan for a given amount. The debt will then be settled with the anticipated rents.
LRD Loan’s basic aspect is that a certain amount of rent must be paid for each rental unit. Tenants and the property owner enter into lease agreements. This agreement calls for a regular payment known as rent. When a property owner files for a home loan or a HDFC Plot Loan, the rental income that has accumulated over the lease’s duration may be utilized as collateral.
Smart house loans
Mortgages are now available from a wide range of financial institutions, and they are frequently linked to the borrower’s bank account.
This home loan category will benefit the most from any additional deposits because interest is calculated by deducting the loan’s principle balance from the account’s average monthly balance. The outstanding principle balance of the Mortgage shall be reduced by the average monthly payment from the linked account to determine the interest based on the applicable HDFC Bank MCLR. Debtors are frequently allowed to take out money from or put money into this account as needed to help keep the system’s liquidity level high enough. But bear in mind that the interest rate on this type of loan (whether it is base rate, HDFC Bank MCLR or repo rate) is normally a little higher than what is offered for conventional house loans.
Step up loans
The income restrictions may reduce the total amount of loans that young, well-paid people just starting their careers are eligible for by preventing them from receiving larger mortgage loans. Numerous banks now provide step up bank home loans, which are mortgages with manageable payback terms for individuals just starting their careers.
The mortgage’s EMI repayment schedule calls for the borrower to make modest EMI payments during the first few years of the loan. These mortgage payments will then be increased in the later years of the loan’s duration to reflect the larger potential for anticipated income growth of such borrowers. When calculating the mortgage’s EMI repayment plan, the potential for these people’s anticipated salary rises was taken into account. Young salaried workers who select this loan option may be eligible for a larger mortgage amount depending on expected future salary growth. Additionally, during the moratorium (pre-EMI) period, borrowers have the choice to pay solely interest on their loans.