A loan given by a bank, mortgage company or other financial
institution for the purchase of a primary or investment residence. In a
home mortgage, the owner of the property (the borrower) transfers the
title to the lender on the condition that the title will be transferred
back to the owner once the payment has been made and other terms of the
mortgage have been met. A home mortgage will have either a fixed or floating interest rate,
which is paid monthly along with a contribution to the principal loan
amount. As the homeowner pays down the principal over time, the interest
is calculated on a smaller base so that future mortgage payments apply
more towards principal reduction as opposed to just paying the interest
charges. HOME LOANS - INTEREST RATES With effect from 01.05.2016Features
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ready/under construction flat or house, home extension and renovation.
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The following are some popular types of home loans available in the Indian housing finance market :
1. Land purchase loansLand purchase loans are taken to buy a plot of
land on which a borrower wishes to construct her/his house. Most banks
offer up to 85 per cent of the price of the land. These loans can be
availed for residential as well as for investment purposes. Almost all
leading banks offer this loan like ICICI Bank (land loan), Axis bank
(loan for land purchase) etc.
2. Home purchase loansThe home purchase loans are the most popular
and the most commonly available home loan variants. These loans can be
used to finance the purchase of a new residential property or an old
house from its previous owners.
3. Home construction loansThese loans can be availed by those
individuals who want to construct a house according to their wishes
rather than purchasing an already constructed one. The loan application
and approval process for home construction loans are somewhat different
from those of the commonly available housing loans.
4. Home expansion/Extension loansHome expansion or extension loans
are useful in situations when people want to expand their existing
house. Expansion includes alteration in the current structure of the
residence to add extra space such as constructing a new room, a floor, a
bigger bathroom or enclosing a balcony. Though many banks provide loans
for these purposes as part of home expansion loans, some banks lend for
the same purposes as part of their home improvement loans.