Are there any other charges that accompany home loans?
TownSIP Research ~ 15 min read
Home loans are usually accompanied by the following extra costs:
Processing Charge: It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan amount or a percentage of the loan amount.
Pre-payment charge: When a loan is repaid before the scheduled duration, a penalty might be charged by some banks, which is known as the pre-payment penalty.
Miscellaneous Costs: Some lenders may also ask for documentation or consultation charges.
What are the types of Home loans available?
A. The banks usually offer these nine types of loans on interest:
Home Purchase Loan: It is the most common type of loan taken for purchasing a new residential property or an old house from its previous owner.
Home Improvement Loan: Home improvement loans are given for executing repair and renovation work at home.
Home Construction Loan: These loans are sanctioned to construct a house on a piece of land you have already purchased. The loan approval and application process for these loans is somewhat different from the other commonly available home loans.
Home Extension Loan: Home extension loans are offered for expanding or extending an existing house. For example, addition of an extra room, a floor etc.
Land Purchase Loan: This type of loan is granted for purchase of a plot of land for both residential or investment purposes.
Home Conversion Loans: These loans are available for people who have already purchased a house by taking a home loan but now want to buy and move to another house. With these loans, they can fund the purchase of the new house by transferring the current loan to the new house.
Balance Transfer Loan: These loans are availed to transfer one’s home loan from one bank to another. It is usually done to repay the remaining amount of loan at lower interest rates or when a customer is unhappy with the services provided by his existing home loan provider and wants to switch to a different bank.
NRI Home loans: These are specialized loans, structured to suit the requirements of NRIs who wish to build or buy a home in India.
Loan against Property (LAP): These loans are given or disbursed against the mortgage of a property.