What Type Of Loan Suits You Better?
Loan agreements come in various forms and depending on your requirement, you can choose from the various types. The benefits offered by one type of loan is different from what is offered by another. This is why it is important for you to understand them better before you opt for one.
MakaanIQ explains the various types of loans and their features to help you make an informed decision.
Loan to buy fresh property
The most commonly available of variant is loan to buy a new unit. When you take a loan to purchase a new unit in a project that is approved or empaneled with a bank it is called a home purchase loan. In this type of loan, lenders usually finance up to 80-90 per cent of the market value of the property. These loans are provided either on fixed or floating interest rates.
All banking institutions and housing finance companies provide this type of loan.
Loan for resale property
This is a loan extended for the transfer of ownership of property from one person to another. Under purchase of resale properties, the agreement to sell (ATS) has to be executed between the applicant and the current allottee. The funding by the lender is decided on the basis of the agreement value mentioned in the ATS.
The legal valuation plays a significant role in such loans.
Loan to buy a plot
Such loans are extended for purchase of a plot of land for house construction. Most banks offer up to 70-80 per cent of the price of the land as loan. These loans can be availed of for the residential or investment purpose. While almost all leading banks offer this loan, many do not extend more than two loans to one borrower.
Loan for home construction
These loans can be availed of by those who want to construct a house according to their wishes. The approval and disbursement of the construction loans is different from the purchase loan. An empaneled technical agency of the lender will first evaluate the property up on which the construction is to take place. After that, the loan amount will be disbursed in several instalments on the basis of the construction stage.
Loan for home expansion/extension/renovation
A loan taken for renovation can include the alteration in the existing structure or addition in the current structure. Again, the technical assessment by the lender plays a very important role in you being able to avail of such loans.
Balance transfer loans
This loan is taken when an applicant wants to transfer his running loan from one bank to another. Under this loan, the outstanding amount of home loan is funded by the transferee bank. This loan is usually taken when an applicant is unhappy with services of the current lender or if the new lender is offering the loan at lower rate. The transfer of loans mostly includes the closing costs or fees.