How to choose the right loan for yourself?

Choose the right loan for yourself.

Borrowing from a bank or a financial institution is perhaps one of the longest commitments to keep and a systematic approach to buying a loan is thus imperative. Choosing the right home is important but equally important is deciding upon the best loan for your requirement.

In this post, we have attempted to demystify the types of loans to aid you in decision making. The information outlined here will assist you in seeking the right loan for the right purpose.

A home loan can be availed by consumers for purchasing a house – a ready apartment or under construction property. The amount, the interest and tenor of the loan is decided as per the policies of the lender, price of property and the individual’s annual income. The borrower also stands to benefit from the loan with regards to income tax.

 Land or Plot loan:

Now, building one’s own home is not a dream as one can own a piece of land or a plot as a thoughtful investment. You can shield yourself from the rising prices of property. Special land/plot loans come handy in such scenarios. There are, however, only a handful of institutions that provide loans for financing this kind of purchase.

Home construction loans:

Most Indians prefer to procure a plot and design their own independent homes; loans for construction of houses are therefore becoming quite popular. Home construction loans available in the market are varied in nature, giving consumers a range of choices whether to build a whole new house or to finance the construction of a newly acquired home.

Composite loan:

A unique product where the lender finances both the purchase of a plot as well as the construction of your house. The housing finance company will not only provide you with a loan for the plot you chose to buy, but will also take care of the construction costs.

 Loan against property (LAP):

Your property is a valuable asset; you can utilise this property to procure loans for any other important need or emergency like acquiring another asset, business expansion, etc. in this type of loan, the borrower uses the equity of his or her home as collateral. Any residential or commercial property can be kept as collateral for LAP, provided the borrower is the title holder of the said asset.

Home improvement loans:

Bored of seeing the same kitchen, living room, and bathroom or just wish to enhance the aesthetic appeal of your property? Then a Home improvement loan is a clever choice. One can opt for this type of loan for repairs, remodelling of kitchen, bathroom, terrace, installation of energy saving equipment or general improvements on an existing property.

Every lender’s policies on each type of loan vary in terms of eligibility, maximum loan amount, maximum tenure and terms of acquiring the loan. You may be required to do a comprehensive analysis on these aspects before taking the final decision.