For many, owning a dream home is just a concept. With expenses hitting the roof, it has become nearly impossible to even think of buying a house, especially if you live in a tier 1 or tier 2 metro city. But, luckily, with the help of home loans, you can take a step closer towards turning your dreams into reality. You can choose to take a loan to buy a house or transform it. Whatever you want, the right options are just around the corner.
However, before you apply for a home loan, it is important to understand your requirement. For example, if you are planning to build your house, you have the liberty to design it from scratch. You can change the designs completely or alter the existing ones. On the other hand, renovating provides you with the leverage of enhancing craftsmanship. This adds value to your house.
Following are the most popular renovation loans you can apply for:-
You can apply for this type of loan if you are planning to remodel your entire house.
Home Equity Loans
Use the equity of your home to take a second credit to remodel your house.
The most common way to fund your renovation or construction is by choosing either a “building loan” or a “construction loan”. The owner should have a clear idea of the proposal made by the lender and the interest charged by him.
There are two scenarios while applying for the right loan:-
- House and land package: Land is purchased along with building plans. A single contract is prepared, which is settled when the house is completed. The loan amount is calculated in the end and the owner pays in a single transaction. The interest is paid on the package amount. Also, this home loan interest is comparatively lesser as compared to the amount paid separately on the house and land.
- The option here is to purchase land without any building plans. Two contracts are prepared. One for the purchase of land and the other for building the house. The funding for the first one is done separately, while a “construction loan” is taken for the second. Progress payments are made in order to draw down the amount that is borrowed. Only when these payments are made, the builder will proceed with their construction work.
Now, construction loans are of two types:-
Once you move in the house, the lender converts the loaned amount into permanent mortgage. Hence, there are two loans in one. In this case, the interest to be paid is high.
The first loan pays for the construction. Once you’ve moved in, you get a mortgage to pay off the construction debt. These are two separate loans.
Whether it is building or renovating the house, you must make the right financing decision. Factors like mortgage stamp, legal costs and insurance cost must be factored in. Along with these, regular inspection of work (construction or renovation) must be done. Progress payments must be done well on time for a smooth home-building process. Whichever of the two loans you choose, make sure to understand all the details well before you sign. After all, it is going to lead you towards accomplishing your dream.
A home from Finserv MARKETS is easy, quick to apply and comes with a host of other features and benefits that you can avail. What’s more? The entire process is online and can be done right from the comfort of your home. So why wait Avail a Bajaj Finserv home loan with Finserv MARKETS and let us help you realize your dream of owning your own house!. Also know difference between equitable mortage & registered mortgage
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