You have a large variety of options in the financing market if you are thinking of a house loan. Banks are showing more interest in approving home financing to their customers than any other loans such as personal and educational loans. What makes a housing financing more attractive to them is the collateral that they are getting as the security for the amount they are realizing under the head home loan.
Nature of home loans
Home financing or house loans normally come under the head of secured loans. If you are a person going to avail a home loan, you will be asked by the bank to transfer the right in the house that you are going to buy in the name of the bank that is arranging finance for purchasing the house. They will retain the rights over the property till you make complete repayment of the loan that you have borrowed from the bank. In case of default in payment the house that you have purchased will be sold in auction by the bank.
Different options of home financing
Home financing can be availed for both construction of houses and purchase of houses that have already completed construction. In construction home loans the lender will normally prepare a fixed draw schedule in accordance with the major phase of the construction works. The bank will also send a surveyor or a verifier to find out whether the work has been completed or not. Normally a construction home finance may require a down payment of 20% or more from the borrower. It can be in the form of cash, equitable securities or the equity in the property or house under construction
If you are thinking of purchasing a house that has already been constructed, you can avoid these complications. In such cases also you will have to make arrangements for down payments. Normally it comes around 3 to 6% of the total value of the house.
You can also avail home improvement loans from financial institutions for renovating your existing house. Normally the collateral will be the house that is going to be renovated by using the fund from the bank.