Due to the rising cost of home and land, consumers have to resort to home loan to buy home or land. For this, the bank and the finance companies have started offering different types of loans on the basis of different needs and profiles of the customers. Therefore, you should also choose a right loan based on your need and financial goals. Let’s look at different types of home loans available in the market.
Pre-Approved Home Loan: Some home loans have already been approved by the bank. These loans are given on the basis of your loan repayment history, your income and your credit score, which reduces the hassle of candidates. It usually takes 48 hours to process the loan. With the help of pre-sanctioned loan, you can buy a house or land according to your budget, but such loans are given only at a set time and they have to be taken within the same time limit. Pre-approved loans usually come at low interest, but some processing fees have to be paid to take advantage of it.
Home Loan with Fixed Interest Rate: In such a home loan, the interest rate remains the same throughout the entire loan period. There is no effect of the ups and downs in the market on this. Lending EMIs in a certain amount every month helps greatly in improving the budget and further planning. Financial security is also available from such loans because there is no effect of the ups and downs in the market. But there is a problem with the interest rate of home loan, available at fixed interest rate, is generally much higher than home loans with an uncertain or temporary interest rate.
Home Loan with Floating Rate of Interest: Home loans with floating interest rates are subject to changing interest rates due to market fluctuations. Temporary interest rates include two things, basic interest rates and temporary components; The change in the floating rate changes when the original rate changes. If you want to take a home loan in the rising inflation scenario, you should stay away from the home loan with floating interest rates, because interest rates are generally inversely related to inflation norms. Changing interest rates on your financial planning have a huge effect as the uncertainty of interest rates can hinder your meeting of other financial responsibilities
Joint Home Loan: A joint home loan is a loan that can be taken together by more than one person. It can be taken in conjunction with a family member in which your spouse, parents, siblings, etc. may be included. Loan payment comes through both accounts, and both are responsible for delayed repayment of loan or due to default. While giving a joint home loan, banks consider the earnings of both members and therefore, the amount of such loan is often much higher than the amount of loan given to one person. Tax benefit of joint home loan, both the members of the loan get.
Home Improvement Loan: If you need money to repair or renovate the house then you can take a home improvement loan. For a year, anyone who lends a loan can take such a loan, but the loan amount is used only for home repair or renovation. Due to the low processing fees and low interest rates compared to the personal loan, home improvement loan, house repair and maintenance can prove to be helpful when the money is tight.
With the advancement in technology, home loan can get quickly and without any hassle. But before taking any loan, keeping your needs in mind, carefully consider the right loan product. The Bank Market is a major online marketplace in India that helps consumers to compare and apply for different types of credit cards, personal loans, home loans, car loan and insurance products.