Due to an increase in urbanisation and affordable interest rates, the housing loan market is expected to grow. As per reports, this market can grow at a compound annual growth rate of 20.58% during the FY 2022 – FY 2027 period. 

Depending on the requirements, potential borrowers can seek different kinds of home loans and opt for the suitable credit options. Here’s more.

Various Types of Housing Loans

Different financial institutions and NBFCs provide different types of home loans. However, before applying for it, lenders always recommend using a home loan eligibility calculator for making suitable financial planning. 

An individual can opt for various types of home loans. Here are some of the types of housing loans in India:

• Loans for home purchase

Financial institutions offer this loan to help individuals unlock their dreams of owning residential property, including bungalows, houses, and flats. This loan is commonly offered by the majority of financial institutions with attractive interest rates. In addition, nearly 80-90% of the property’s current value is offered as a borrowing amount. 

Since this is a long-term financial commitment, an individual must plan the repayment and overall financial planning in advance. In this regard,  home loan EMI calculator can be quite beneficial as it helps in estimating the total borrowing cost and monthly payments conveniently.

• House expansion loans

If one has to raise funds for renovating, refurnishing, or repairing his/her house, then that individual can apply for housing loans. Extending or renovating a house often involves colossal expenditure. 

Therefore in order to meet this expenses, house expansion loans can be a viable option. With simple repayments through monthly instalments and a hassle-free home loan process, customers can meet their expansion-related expenses by opting for a home loan.

• Pradhan Mantri Awas Yojna

The Government of India launched the Pradhan Mantri Awas Yojna scheme in 2015. It is mainly a credit-linked subsidy scheme with the intent to provide affordable housing for the urban poor. Subsequently, this scheme also enables borrowers to avail of interest subsidies against home loans. However, applicants must know the Pradhan Mantri Awas Yojna eligibility criteria before applying for the loan.

• Land purchase loan

Individuals who desire to own a plot of land for house construction or any other purpose can opt for housing loan. Attractive interest rates and customised repayment options make it pocket-friendly to buy a plot of land in a city of their own choice. 

• Home loan balance transfer

Nowadays, with affordable repayment terms and competitive interest rates, home loan applications have witnessed a potential growth. In addition, existing borrowers can opt for a home loan balance transfer to further increase the affordability of housing loans. 

The facility of a home loan balance transfer brings several benefits, such as lower interest rates, pre-payment facility, etc. However, an individual opting for this facility should consider associated charges and perform a cost-benefit analysis to ensure that they are saving considerably.

In addition, to ensure a stress-free loan application, one must always follow the eligibility parameters mentioned below.

Home loan eligibility criteria

Before availing of a home loan, it is mandatory to meet the eligibility criteria set by the lender.

• The applicant must hold Indian citizenship.
• For salaried individuals, they should be between 28 to 58 years. However, self-employed applicants should be between 25 to 70 years.
• Salaried applicants must have a minimum work experience of 3 years. In addition, self-employed individuals must have at least 5 years of business continuity in their current business.
• Applicants must have a good CIBIL score. Generally, the minimum CIBIL score for a home loan is 750 or higher.

Furthermore, there are lists of all the documents considered mandatory to avail of a home loan which may vary from lender to lender. 

Availing of different types of a home loans becomes quite easy with pre-approved offers. Various reputed lending institutions and NBFCs provide pre-approved offers. These offers are available for financial products like loan against property and others. Individuals can check their pre-approved offers by providing requisite details, such as their names and contact numbers. These offers can help streamline the loan application process.