The purpose of a home loan is to provide funding for the purchase or building of a residence. On the other hand, a mortgage loan does not restrict how the loan money may be used. Both house and mortgage loans have their advantages and disadvantages, and it’s easy to see why.
For various circumstances, you may find yourself in need of a loan. As a result of the wide range of conditions, a wide variety of loan products are now accessible in the marketplace. Some of them are so similar that it’s simple to get them mixed up. When it comes to these two terms, many people get them mixed up.
In India, government and commercial banks and non-bank financial institutions provide a variety of house loan choices. To choose which choice is best for you, you must be familiar with your possibilities.
There are several different kinds of property and home loans available, including the following:
NBFCs (non-banking financial firms) and banks provide money to those who want to acquire land in order to build a home on it. Typically, banks will finance up to 80% to 85% of the purchase price of the plot or property purchased.
A loan to buy a house
A home-buying loan is used to acquire a residence. Loans from financial institutions often cover 80-85% of a home’s market value. These loans have a fixed, adjustable, or hybrid interest rate.
Financing for the building of a new home
Financial organizations offer home loans to people who wish to build a house on a piece of land or are jointly held by them. The loan application and approval procedure for home-building loans differ in certain areas from those of frequently accessible housing loans available. The following are included in this list:
- This land or property must have been purchased within the last year.
- The borrower must estimate the cost of the house’s construction before applying for a loan.
- There is no consideration given to a property’s cost if it is not included in a loan amount.
These loans are taken out by those who desire to add on to or enlarge their current home. In most banks, the objective of a home extension loan is not taken into account when approving a loan. Most banks feature this form of financing in their home-improvement loans.
Loans for home renovations
Mortgages already in place, aA home conversion loan may be used to acquire a new home for borrowers who want to relocate out of their current residence.
Buying a house is usually the most expensive investment you’ll ever make. Because of this, a house loan permits you to borrow more money with the same amount of security, but a mortgage loan does not. The emi calculator for home loan will let the bank know the perfect amount for the EMI of the home loan.
Interest rates for home loans are lower than mortgage rates. To make house ownership more accessible to all Indians, the Reserve Bank of India has reduced the margin requirements for home loans.
Lenders of home equity loans and mortgages are known for their generous repayment terms. A house loan’s term might go up to 30 years. Mortgage loans usually have a 15-year term. However, several lenders offer a 20-year term. Depending on your financial situation, you may be able to make partial or complete prepayments to shorten the duration or lower your EMI on these loans.