By Dilip V Mohan

If you plan to buy your dream home, then many different schemes lead to it:

1. Home-Loan: It is a term loan scheme with Equated Monthly Installments (EMIs) under fixed or floating rate of interest.

2. Overdraft-Loan: It is a home loan in the form of current account overdraft where you can park your surplus funds and thus minimize the interest burden – overdraft limit is reduced every month as per the EMI amount.

3. Flexi-Loan: It is a loan with one portion of fixed interest rate and the other portion with floating interest rate.

4. Realty-Loan: It is to buy a vacant land or plot where you can build your dream home. It helps in beating price rises on realty and build homes later.

5. No-Mortgage-Loan: It is a loan where you need not hand over the house documents but give a lien on your other savings, insurance policies or shares.

6. Top-up-Loan: Finally, after availing your home loan, you can go for top-up-loans for home improvements/furniture or fixtures.

7. Fixed and Floating Interest Loan: You can avail the loan either on fixed rate of interest or floating rate of interest. Fixed-interest ns are those for which the interest rate is fixed for the whole tenure. It is insulated against market rate fluctuations. Usually, a small premium is loaded to the current interest to offset any loss to the bank/financial institution. Floating rate of interest is thloae rate that is linked to the prime lending rate of the Central Bank (Federal Reserve) of the country. If the Central Bank increases (decreases) the prime lending rate, then the bank/financial institution also increases (decreases) its interest rate.