Buying a home in India is a dream that everyone wants to bring into reality. The rapid development of the real estate sector in the country has given rise to different types of mortgages. Now, borrowing money has become easier than ever. So, in this blog, we will discuss the types of real estate mortgages in India, eligibility criteria, and other things related to it.
Types of real estate mortgages in India:
Home purchase loans
Home purchase loans are the most popular mortgage type in India. Under this type, purchasers borrow money from banks or housing finance companies to buy ready-to-move or under-construction residential apartments.
Usually, the tenure of home loans varies from 10 years to 25 years based one one’s eligibility. Borrowers can take tax benefits on home loan interest rates up to Rs 2 lakh.
Construction loans
Plot owners who want to construct a home on their land can leverage construction loans. These are mortgages in which banks provide the loan to cover the construction cost. Unlike other loans, this loan type offers the amount in a phase-wise manner or construction-linked disbursement. The amount is paid as the construction progresses.
LAP (Loan against Property) or Property Mortgage Loan
LAP is also known as the property mortgage loan. Under this loan type, homeowners or property owners can borrow money from banks against their property. Choosing such a loan also ensures that the person remains the owner either fully or partially as per the terms. The property is pledged as the security to obtain the loan.
Borrowers can take out LAP on residential, rental, and commercial properties. Also, the rate of interest is usually cheaper than the home loan mortgage.
Top-up loans
Top-up loans allow borrowers to take an additional mortgage on their existing loan. A top up loan can be used for home renovations, expansions, repairs, and other needs.
Balance transfer loans
Under this loan, borrowers can transfer their existing loans from one bank to another. The foremost use of this loan is to reduce home loan interest rates. The new lender may provide flexible loan terms, lower EMIs, and other benefits if the borrowers transfer their loans from other banks to theirs.
What are the documentation and eligibility criteria?
Make sure you fulfill these eligibility and documentation criteria to obtain any of the earlier-mentioned real estate mortgages.
- The applicant should be between 21 and 65 years old.
- The borrowers’ income status should maintain a regular flow of income, ensuring repayment capacity.
- Borrowers should maintain a flawless credit score for easily loan approvals.
- Borrowers should have all the property-related documents such as, sale deed, encumbrance certificate, title deed and other to prove ownership. Check the list of documents required from your side.
- Borrowers also need to submit bank statements, proof of address, and proof of identity to the bank before obtaining a mortgage.
Conclusion
Having a thorough understanding of mortgages in Indian real estate is essential. You can make informed decisions based on your knowledge of these mortgage types, eligibility criteria, interest rates, repayment options, and documentation requirements. The more informed you are, the better decisions you will make.
