All About 7 Types of Housing Loans
Home loan is a mutual agreement between the borrower and the lender in which the borrower purchases a property and the lender keeps the same property as the security for the amount borrowed by the borrower. There are different types of home loans available in the market and you should have enough knowledge about different kinds of home loans before applying for the home loan.
The different types of home loans are presently available in the market:
· Home Purchase Loans
· Home Improvement Loans
· Home Construction Loans
· Home Extension Loans
· Home Conversion Loans
· Land Purchase Loans
· Bridge Loans
All of the above mentioned home loan types are explained below:
1. Purchasing a Home Loans
The basic type of home loans that are used for purchasing of a new house.
2. Improvement in Home Loans
The loans which are used for the rennovations of the home given for implementing repair works and
renovations of the house that are already purchased by the customer.
3. Construction of Home Loans
For the construction of a new house these loans are also available .
4. Extension of Home Loans
For the expansion of an existing house these loans are available to the
customer. For example: in the house addition of another room, etc.
5. Conversion of Home Loans
These loans are available for those who have already financed their existing house with a home loan and wish to buy and move to another house for which some extra funds are required. With this type of loan, the existing loan of the customer transfers to the new house that includes the extra amount that the customer requires. This eliminates the need of pre-payment of the previous home-loan that the customer borrows.
6. Purchase of Land Loans:
For purchasing land for construction these loans are available. For the investment purpose these loans are also available.
7. Bridge Loans:
If you have wish to sell the existing house and purchase another one then you can take bridge loans. Until a buyer is found for the new house the bridge loans are help in financing the new house.
You can also get home loan, if your credit history is not good and it’s also possible to take home loan, in the case of debt consolidation. These days, it’s quite easier to take a debt consolidation home loan with a poor credit history. Before proceeding further, we need to know that what exactly the term “debt consolidation” stands for. Debt consolidation is a process through which you can combine all your debt payments into a single unit of payment to pay every month. This provides great benefit since the single monthly payment amount is very less as compared to the sum total of all the monthly loan payments. It proves to be a great idea for the persons who suffer from debt related issues. But, before applying for a loan, you should calculate your total income and the amount that you will have to pay every month. This will not burden your pocket after you take loan and pay installments.
The two types of Loans which are used for debt consolidation loans are available in the market. These include:
· Secured debt consolidation loan
· Unsecured debt consolidation loan
Secured Debt Consolidation Loan
In a Secured home loan, you can borrow a specific amount from the lender with collateral that includes your home, car, or anything. The collateral that you mention while taking a home loan serves as a security for the lender, to recover money, in case, if you do not pay your debt. The secured loan offers lower interest rates. Hence you have to search for a lender who can provide you secured loans service , if you opt for a secured loan.
Unsecured Debt Consolidation Loan
In an Unsecured h ome loan, you can borrow a specific amount of money from the lender and it do not include any collateral. As it is borrowed without collateral, so it is referred to as an unsecured loan. There are different criteria of different lenders for providing these loans. Usually, the unsecured loans have higher interest rate as the lender takes higher risks on unsecured loans because the lender do not have any collateral or security.
Eligibility for taking Home Loan: The person who is of 21 years or above is eligible to apply for a home loan but he must have a regular income.
Credentials: There are certain documents that a salaried person has to submit to the bank to get home-loan. Documents that a bank needs to sanction your home-loan include:
· A photograph with an application form.
· Proof of Identification and Residence.
· Salary slip should be current.
· Last Income Tax Returns document and form no.16.
· The statement of annual bank and also Last 6 months.
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