Home Loan Options for First-Time Buyers


A home loan is a long-term commitment, and one must have a proper understanding of its financial implications. As a first-time buyer, you must know in detail the different lending institutions, their home loan interest rates, eligibility criteria for home loans, and various other factors that influence your decision. So, if you are thinking of buying a home and need guidance in this regard, then here are a few guidelines for you as a first-time buyer.

Top Home Loan Options for First-Time Home Buyers/Constructors

Here are a few home loan options for people who are planning to buy or construct a home for the first time. Keep these points in mind while looking for the best home loan options:

  1. New Home Loans – New home loans are offered to eligible customers who are looking to purchase a house or property for the first time. It is the most popular type of home loan available to purchase a newly built apartment or an already constructed property. All bank and financial institution in India offers this type of loan, however each has its home loan EMI and follow its interest rate policy, eligibility criteria, and other loan terms.
  2. Pre-approved Home Loan – Pre-approved home loans are offered by banks to eligible borrowers. Creditworthiness (CIBIL/Credit score), income, and financial position (other debts and running loans) are taken into consideration for an in-principal approval of the loan. These loans are generally taken before property selection and are valid for a limited period (usually 3 months). These types of loans are processed quickly and offer you better bargaining/negotiating power with a developer or a seller.
  3. Home Construction Loans – Can be availed by people/individuals looking to construct a house on a residential plot or a development authority allotted plot. These have a longer tenor and some lenders even allow special concessions to women The loan eligibility age criteria can be a maximum of 65 years. This type of loan option is suitable for people who are already owners of a plot of land or property and just need the finance to complete the construction of the home.
  4. Plot Loans – Plot loans are loans offered to customers looking to purchase a piece of land or plot to construct a house on it. In our country banks offer plot or land loans to eligible applicants. Such loans can be availed of to buy a residential plot where you can build your dream home. They are available at attractive rates and can be repaid in affordable EMIs with the repayment tenor going up to 25 years.
  5. Home Extension/Renovation Loans – These loans are offered by banks and Non-Banking Financial Corporations (NBFCs)/Housing Finance Corporations (HFCs) to people looking to extend or add to their existing residential home property. These home extension loans are usually offered to both existing home loan borrowers and new customers. Most lenders offer it as a traditional home loan product or as an independent offering within the broader category of home loans. A home extension loan is offered by lenders usually at floating interest rates and for tenors extending up to 30 years. 
  6. Balance Transfer Home Loan – If you have already availed of a home loan from a lender or an institution but are not happy with their interest rates or services, then no need to panic! You are not alone and are the first to feel so. The balance transfer home loan option helps you transfer an existing home loan from one bank to another. Also known as refinancing, this also helps a borrower avail of lower interest rates and better services from the current lender. There is lesser documentation involved in a home loan balance transfer and it is easier to attain when compared to home loans.
  7. Home Loan Top Up – Sometimes even after availing of a home loan, an additional amount might be required for meeting other additional expenses related to the house. The home loan top-up facility comes to the aid of borrowers looking to meet these extra expenses related to home improvement/construction/purchase or other personal economic requirements. It is an additional loan amount that a borrower can avail of over and above the existing home loan that has been already borrowed. The maximum loan amount and the tenor available under the top-up loan vary from lender to lender. Customers have the flexibility to avail of top-up loans from the existing lender or a different lender through balance transfer at better rates.

Summing up

Being a first-time home buyer can be a little stressful, especially if you are opting for a home loan to finance your home purchase. It is a big decision and should be done knowing full well the implications. A first-time home buyer may be confused by different lenders vying for their attention through their attractive products. But, staying informed can help them choose the best home loan option given their financial standing, EMI affordability, tenor requirements, credit worthiness, etc. 

So, choose from the home loan options mentioned above and make your dream of having your own home come true. Remember it is your decision and making the right decision is what matters the most and hopefully, this article will help you to do the same.

Must Read: How to Get Lowest Interest Home Loan in Chennai

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