A Complete Guide to Home Loan Types & Benefits

 Most people’s greatest ambition is to own their own home, which is also one of the most expensive things they will ever do. Home loans are the only way for buyers to fit such a dream lifestyle into their budget, and if they want their dream home, they must take out a home loan. A home loan can be used to purchase a new home or apartment, the land on which to build it, or even for home renovations, additions, and repairs. BASIC home loan has divided the types of home loans that can be availed in India.

Home loan

This is the type of home loan that is most commonly availed by people to buy a new house. A number of public and private banks and housing finance companies offer loans to borrowers who wish to purchase a house and can repay the amount in monthly instalments with the added interest rate on housing loan. 

House construction loan

In case you have already bought a plot and need funds to build a house on that piece of land, this type of loan is the best for your requirements.

Basic Home Loan


Loan for home extension

If you already own a home, but want to extend it with more rooms or an additional floor, this type of home loan can be your saviour. You can borrow a home extension loan to fulfil the purpose.

Loan for home improvement

It may happen that the house you live in was built a long time ago and it now demands some repair and renovation. At this point, you may consider opting for a home improvement loan to fix the faulty parts of the existing system such as the electrical system, exterior or interior setup, or any other issue related to your home’s functionality.

Home loan balance transfer

It works when you currently have a home loan borrowed but the interest rates are a little overwhelming for you. Or you are probably not happy with the lender’s service and management. In this case, you are free to transfer the outstanding amount of your loan to a different lending body at a lower interest rate. Additionally, you may want to know about the top-up loan facility there.

Composite home loan

There can be chances of you not finding the perfect abode for you and your family even after seeing lots of houses already. You may consider buying a plot and constructing a house of your liking. For this purpose, a composite home loan can be availed for both buying the plot and constructing a house on it. 

Various benefits of borrowing a home loan

Tax benefits

The income tax deduction you can claim on the interest rate and the principal loan amount is the first and foremost benefit of taking a home loan. You are permitted to deduct up to Rs. 1.5 lakh for main repayments under Section 80C, Rs. 2 lacs for interest repayments under Section 24B, Rs. 2 lacs for interest repayment under Special Circumstances under Sections 80EE and 80EEA, and Rs. 1.5 lakh for stamp duty costs under Section 80C.

The lower interest rate on housing loans

As compared to other types of loans, home loans are lent at the lowest interest rate. With the facility of a top-up loan, you can get an add-on loan on your current home loan instead of borrowing a personal loan.

Longer Repayment Tenure

Repayment of a home loan is considered to be less burdensome for borrowers in comparison with other types of loans. This is because the tenure of home loan repayment can be as long as 25-30 years. As a result, the amount of EMI decreases considerably and makes it easy for the borrower as it can be relatively a bigger amount.

No prepayment penalty

There can be times after you have borrowed a home loan, that you have a lump-sum amount of money in your hand to make a prepayment. If you took the loan at a floating rate of interest, you can easily make a prepayment without worrying about any prepayment penalty. This way you can close the home loan way before its tenure.

Summing up

Above are some fundamental types of home loans and their benefits that you would want to have an overview of before choosing the best bank for home loan for you. BASIC home loan is a trusted home loan platform which not only helps you find home loans at low-interest rates but also makes the entire process to follow much easier.





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