HOME PURCHASE LOAN - 
The common loan for purchasing a home.

HOME IMPROVEMENT LOAN
 - A loan given for undertaking repairs, renovations and/or upgradation of your home.

HOME CONSTRUCTION LOAN - 
A loan for the construction of a new home.

HOME EXTENSION LOAN
 - Home extension loans are given for expanding or extending an existing home. For example, addition of an extra room, etc.

HOME CONVERSION LOAN - 
A loan available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.

LAND PURCHASE LOAN
 - This type of loan is sanctioned for purchase of land for home construction.
BRIDGE LOAN
 - The Bridge Loan is designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.
BALANCE TRANSFER LOAN - 
Balance Transfer Loans help you pay off an existing home loan by availing a new loan from another willing lender institution.

REFINANCE LOAN - 
This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.

LOAN TO NRIs
 - This loan is tailored for the requirements of Non Resident Indians (NRIs) wishing to build or buy a home in India. These loans are provided by eligible financial institutions in accordance with the guidelines issued by the Reserve Bank of India from time to time.

EMI (Equated Monthly Instalment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of interest due, as well as a portion repayable towards the principal.

a) Some of the lending institutions sanction the loan in-principal in advance of your identifying the property
b) Free accident insurance
c) Waiving of pre-payment penalty
d) Waiving of processing fee
e) Free property insurance

To qualify for a home loan, most of the lending institutions in India require you to be:
a) An Indian resident or NRI
b) Above 21 years of age at the commencement of the loan
c) Below 65 when the loan matures
d) Either salaried or self employed and
e) Worthy of credit facility
For more details, refer module on "What are you getting into?"

Interest rates vary from institution to institution and presently range from 8.5% to 10% depending on the customer classifications. The interest on home loans in India is usually calculated on monthly reducing balance. In some cases, daily reducing basis is also adopted.

ANNUAL REDUCING
 - In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender through EMIs paid during the year. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.

MONTHLY REDUCING
 - In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.

DAILY REDUCING - 
In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

Usually, most companies give home loans up to a maximum of 85% of the cost of the house. Balance 15%, sometimes called 'seed money', has to be provided by the loan applicant upfront. The amount, for which the applicant is eligible, is determined by the age, income, number of dependents, monthly outgoing and repayment capacity. This varies from case to case.

In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.

Some institutions ask for guarantors.

t varies from 3 to 15 days.

On an average, loans are disbursed within 3 to 15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 20% or 25% of the cost has been paid upfront to the seller of the property.