An Overview of Home Loan Varieties in India

Introduction:

What is a Home Loan?

Let’s move forward by discussing the Home Loan definition and its types.

A Home Loan is the amount borrowed by individuals to fund their expenses. You can opt for this Loan no matter the cause: renovating or constructing, purchasing a house, buying a resale home or extending your current home.

A part of your property is used as collateral by the lender. After completely paying off the loan amount, you regain your property's ownership. The banks usually offer a loan of up to 90% of the property's market value.

Which type of Home Loan is best in India?

Let’s bring to light the best type of home loans in India along with the Eligibility and the Documents required for the following:

1. Loan for Purchase of Land:

This is a home loan type in which you purchase a piece of plot or land. This loan is approved when you intend to purchase an empty plot of land.

This loan type does not cover the cost of building a house on the land. Here, your interest rate is higher than a standard home loan since land is considered a riskier collateral.

Eligibility Criteria:

Find the eligibility criteria for the purchase of land below:

• Age: 18 – 65 years
• Nationality: Should be an Indian citizen
• Employment status: The applicant must be salaried or self-employed

Documentations:

Listed below are the documents required for the purchase of land.

• Age Verification:
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) for the last 2-3 years
  • Form 16
  • Bank statements for the last 6 months
  • Business financial statements (for self-employed individuals)
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Driver’s License
• Existing Loan Documents (if any)
• Down payment proof:
  • Bank statements showing the source of your down payment
  • Gift deed (if part of the down payment is a gift)
• Documents of Property to be Purchased:
  • Sale Agreement
  • Property Title Deed
  • Approved Building Plan
  • Property Tax Receipts
  • Encumbrance Certificate
  • Khata Certificate
  • NOC from the builder or housing society
• Legal Documents:
  • Affidavit of title
  • Property registration papers
  • Sale deed
  • Possession certificate

2. Loan for Home Purchase:

The home purchase loan type is granted when you want to buy a pre-constructed house or a residential property. A home purchase loan type does not usually cover the cost of construction or the purchase of land. If you fail to repay the loan, the lender can take possession of the property through a legal process called foreclosure.

Eligibility Criteria:

Find the eligibility criteria for Loan for Home Purchase below:

• Age limit:21 – 65 years
• Employment status: The applicant must be salaried or self-employed
• Minimum salary: Can be 10,000 p.m.
• Minimum income for a business owner should be Rs. 2 LPA
• Tenure: Maximum tenure for the loan is 30 years
• Credit history must have a clean repayment record

Documentations:

Listed below are the documents required for a home purchase.

• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) for the last 2-3 years
  • Form 16
  • Bank statements for the last 6 months
  • Business financial statements (for self-employed individuals)
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Driver’s License
• Existing Loan Documents (if any)
• Down payment proof:
  • Bank statements showing the source of your down payment
  • Gift deed (if part of the down payment is a gift)
• Documents of Property to be Purchased:
  • Sale Agreement
  • Property Title Deed
  • Approved Building Plan
  • Property Tax Receipts
  • Encumbrance Certificate
  • Khata Certificate
  • NOC from the builder or housing society
• Legal Documents:
  • Affidavit of title
  • Property registration papers
  • Sale deed
  • Possession certificate

3. Loans for the Construction of a House:

Let’s have a look at what this home loan type means:

Over here, you get this loan on owning a piece of land wherein you wish to build your home. In simple words, instead of buying a pre-constructed house, you purchase land wherever you like, and get this loan to construct the house on that land.

You are either given a lump sum amount, or the loan will be disbursed in instalments at different stages of construction. As you progress further in the construction process, accordingly, you receive funds to cover the costs of materials and labour.

Eligibility Criteria:

Find the eligibility criteria given below:

• Age limit: 18 – 65 years
• Minimum salary: 25,000 p.m.
• Employment status: The applicant must be salaried or self-employed
• Nationality Should be an Indian citizen
• Your credit score should be above 750

Documentations:

Listed below are the documents required for the Construction of a House.

• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) for the last 2-3 years
  • Form 16
  • Bank statements for the last 6 months
  • Business financial statements (for self-employed individuals)
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Driver’s License
• Existing Loan Documents (if any)
• Down payment proof:
  • Bank statements showing the source of your down payment
  • Gift deed (if part of the down payment is a gift)
• Documents of Property to be Purchased:
  • Sale Agreement
  • Property Title Deed
  • Approved Building Plan
  • Property Tax Receipts
  • Encumbrance Certificate
  • Khata Certificate
  • NOC from the builder or housing society
• Legal Documents:
  • Affidavit of title
  • Property registration papers
  • Sale deed
  • Possession certificate

4. Extension Loan:

Have you ever caught yourself wanting a bigger, more spacious room? Or maybe you want to modify your gallery to give you another room? Or maybe you want to add another storey? Well, a home extension loan will help you finance all these expenses.

Why would you need a Home Extension Loan? Because these kinds of changes can easily cost you lakhs of rupees to spare. This is a help for those who cannot just cough up this so money in one go.

Eligibility:

• Nationality:Should be an Indian citizen. If you are an NRI citizen, some banks, NBFCs & HFCs can offer you a home extension.
• Age Limit: 18 years and above can get a Home Extension Loan. Given in the criterion list, you should not be more than 70 years of age when completely paying off the Loan.
• Employment status: The applicant must be salaried or self-employed to apply for the extension.
• On-record Borrower If you are an on-record borrower, you are given the liberty to add one or more co-borrowers. This will benefit you by obtaining an added source of income and also getting to choose a higher loan tenure.
• CIBIL Score: A Home Extension Loan is provided to those with a credit score ranging from 750 or above, providing you with a low interest rate.

Documentations:

Listed below are the documents required for the Construction of a House.

• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) for the last 2-3 years
  • Form 16
  • Bank statements for the last 6 months
  • Business financial statements (for self-employed individuals)
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Driver’s License
• Existing Loan Documents (if any)
• Down payment proof:
  • Bank statements showing the source of your down payment
  • Gift deed (if part of the down payment is a gift)
• Documents of Property to be Purchased:
  • Sale Agreement
  • Property Title Deed
  • Approved Building Plan
  • Property Tax Receipts
  • Encumbrance Certificate
  • Khata Certificate
  • NOC from the builder or housing society
• Property/home extension-related documents
• Estimated cost quotation for home extension
• Duly filled application form

5. Loans for Home Improvement:

Have you ever thought of your home as a canvas? The endless possibilities. Whether you dream of an alluring living room or enhancing your existing properties, maybe you want an aesthetic garden by adding a simple fountain or a greenhouse.

But what if you don’t have the immediate funds to turn these dreams into reality? For this purpose, loans for home improvement come into the picture. Enhance your property according to the dream you have in mind with the help of this loan.

Eligibility:

Find the eligibility criteria for Loans for Home Improvement below:

• Age Limit: 18 – 65 years
• Employment status: The applicant must be salaried, self-employed, non-professional

Documentations:

Listed below are the documents required for a Home Improvement.

• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) details
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
• Existing Loan Documents (if any)
• Down payment proof:
  • Bank statements showing the source of your down payment
  • Gift deed (if part of the down payment is a gift)
• Original Property Title Deeds
• Estimated Renovation Quotation

6. Balance Transfer Home Loans:

Have you heard about the concept of a Balance Transfer for a Home Loan? This is when you refinance your home loan from one lender to another. Like when you want to swap your old pair of jeans with new ones from your local mall. Balance Transfer is precisely the same.

Don’t you want your interests to be lower? Without any nightmare payments. Do good research on the lender you want to transfer, pertaining to reasons like interest rates and better services offered.

Eligibility:

Find the eligibility criteria for Balance Transfer below:

• Age Limit: 23 – 65 years
• Employment status: The applicant must be salaried, self-employed
• Nationality: Can be an Indian resident or an NRI

Documentations:

Listed below are the documents required for a Balance Transfer Home Loans:

• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Passport size photograph
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) details
  • Last 3 years’ balance sheet and profit and loss account statements (for Self-Employed)
• Bank statements from wherein the home loan EMIs were deducted amounting to the last 12 months of the account.
• The Loan statement copy and complete documents relating to the property currently in possession of the present home loan lender.

Conclusion:

Right then, let’s wrap this journey up before you get any more bored with all the “Tax Talks”. Before you go, remember this: your best pal and your allies are your tax benefits in this adventure. Bear in mind that you’re not just buying a home you’re building your financial future.

This golden ticket to financial perks isn’t just words written in a blog; they are the key to unlocking a brighter, more financially secured future. We hope this article helps you with the best information possible. Happy house hunting!

7. NRI Home Loans:

Even this is an option provided by banks among the many home loan types in India. Non-resident Indians are given the opportunity to purchase residential properties in India. Many public and private sectors offer these types of Home Loans to NRIs.

This is one of SBI Home Loan types too. It's smarter to use a home loan to buy a property instead of your own money, especially if you can invest your funds elsewhere for higher profits.

Eligibility Criteria:

Find the eligibility criteria for the NRI Home Loan below:

• Age Limit: 23 – 65 years
• Employment status: The applicant must be salaried, self-employed
• Resident Type: Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs)

Documentations:

Listed below are the documents required for a Balance Transfer Home Loans:

• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
  • Passport size photograph
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Income Proof:
  • Salary slips for the last 3-6 months (for Salaried individuals)
  • Income Tax Returns (ITR) details
  • Valid work permit
  • Employment contract - an English translation duly attested by the employer/ consulate / our foreign office / Embassy in case it is in any other language
  • Latest salary certificate /slip in original and copy of identity card issued by the current employer
  • Duly acknowledged copy of last year's Individual Tax Return except for NRIs/PIOs located in Middle Eastern countries and employees in the Merchant Navy.
• Property papers:
  • Permission for construction (where applicable)
  • Registered Agreement for Sale (only for Maharashtra)/Allotment Letter/Stamped Agreement for Sale
  • Occupancy Certificate (in case of ready-to-move property)
  • Share Certificate (only for Maharashtra), Maintenance Bill, Electricity Bill, property tax receipt
  • Approved Plan copy (Xerox Blueprint) & Registered Development agreement of the builder, Conveyance Deed (For New Property)
  • Payment Receipts or bank A/C statements showing all the payments made to Builder/Seller
• General power of attorney

8. Bridged Loans:

A bridge loan is a safety net that individuals and businesses can use to secure short-term funding when they are in a situation that demands immediate capital.

Whether you're a homebuyer waiting for the sale of your current house or a business owner seeking funds for a new project while your long-term financing is pending, a bridge loan can be the financial bridge that carries you safely to your destination.

Eligibility Criteria:

Find the eligibility criteria for Bridged Loans below:

• Age Limit: 18 – 70 years
• Employment status: Property owners and co-applicants

Documentations:

Listed below are the documents required for Bridged Loans.

• Age Verification
  • Birth certificate
  • 10th class certificate, etc.
• Address Proof:
  • Recent utility bills (electricity, water, gas)
  • Ration card
  • Aadhar Card
  • Rent Agreement (if applicable)
• Income Proof:
  • Salary slips for the last 3-6 months (for salaried individuals)
  • Income Tax Returns (ITR) details
• Identification Proof:
  • PAN Card
  • Passport
  • Voter ID
  • Aadhar Card
• Property papers:
  • Permission for construction (where applicable)
  • Registered Agreement for Sale (only for Maharashtra)/Allotment Letter/Stamped Agreement for Sale
  • Occupancy Certificate (in case of ready-to-move property)
  • Share Certificate (only for Maharashtra), Maintenance Bill, Electricity Bill, property tax receipt
  • Approved Plan copy (Xerox Blueprint) & Registered Development agreement of the builder, Conveyance Deed (For New Property)
  • Payment Receipts or bank A/C statements showing all the payments made to Builder/Seller
• Bank statement showing repayment of ongoing loan

Why you should choose SBI for your Home Loan:

• With various SBI Home Loan types, all the customers’ needs are taken into consideration, and so, you are provided with loans that are best suited for you.
• Low Interest Rates are a benefit that is provided to every individual. The interest rates depend on a lot of factors like your CIBIL score, income, occupation and employer profile, as well as the loan rate.
• A Low Processing Fee is mostly charged.
• There are No Hidden Charges when choosing SBI for your Home Loans.
• You don’t need to pay any Pre-Payment Penalty.
• Interests are charged on Daily Reducing Balance.
• Repayment is provided for up to 30 years by SBI Home Loan.
• Overdraft Facility available- Home Loan is available as an Overdraft.
• Concession for Women applicants- Women are given concessions when it comes to interest.

Conclusion:

These were the following types of home loan programs in India that we jotted down for your convenience. We hope this article has given you a detailed explanation on “What type of home loans are there?” So, fear not and dive into it with a thorough and reliable research plan.