Everyone wishes to own a house, but most people are unable to do so due to financial constraints. While credit options are readily available, they are often expensive.
A home construction loan offers a viable alternative to costly loan options. Through these loans, Indian lenders provide funds for house construction. Lenders provide home construction loans to their current home loan customers and new customers.
This article explains all the essential bits of a home construction loan, including its types, processes, and benefits. Read on to learn more.
About Home Construction Loan
By availing this loan, borrowers can build their own house rather than purchase a property or an apartment.
Lenders ask for information regarding the property and check the property documents. Before approving the loan, the loan provider inspects the construction site or sends a third-party team to evaluate it.
Once the loan has been approved, the lender disburses the loan amount in stages according to the needs of the construction.
Features Of Home Construction Loan
Quick Turn Around
You will not have to wait a long time for the loan amount to be transferred to your account. Lenders generally disburse the loan amount within 72 hours.
Ample Loan Amount
Home construction loans are popular as they provide the needed amount for your house’s construction without hassle.
You can make use of the home loan calculator to check the amount you are eligible for and the interest rates.
With lenders like PNB Housing, you can get a flexible tenure of up to 30 years. So, you can easily construct your dream house without pressure.
Home Construction Loan Types:
There are three main types of loans that borrowers can opt for:
This type of loan is the best option for those who already have a plot registered under their name.
You can apply for this loan if you want to build a new room or resize your house. You can also apply if you want to do major repairs to your house, repaint, or give it a new look.
Plot and Construction Loan
If you don’t have a registered plot and need cash to buy the plot along with the construction, then a P+C construction loan will be the best option.
How to Easily Avail a Home Construction Loan?
The following tips will increase your chances of securing a home construction loan conveniently and quickly.
Maintain A Good Credit Score
A CIBIL score shows your eligibility for the loan as it speaks volumes about your repayment history and past repayment default (if any). A CIBIL score of 800 will make you eligible to avail of better loan amounts at the best interest rates.
You can improve your CIBIL score by repaying all the due bills within the given timeframe.
Apply According To Eligibility
Banks and lenders consider the income flow and ability to repay the loan to determine the loan eligibility.
With the help of tools like a home loan calculator, you can check your eligibility before applying.
Have Necessary Documents At Hand
Borrowers have to provide essential documents to give lenders information about the property, house size, materials needed for construction, and the contractor’s name.
Documents Needed For Home Construction Loan
KYC documents are essential for securing a home construction loan. These documents include the borrower’s information, such as your address, employment details, age, income tax returns, etc.
Following are the documents you will have to provide:
- Age proof
- Address proof
- Identity proof
- Documents related to property
- Employment proof
- Duly filled application form
- Estimated cost for home construction
A home construction loan is the best way to construct a house. The benefit of this loan is that they are usually approved faster than any other loan type, provided that you have all the essential documents along with a construction plan.
Read all the terms and conditions before applying for the loan, and use the home loan calculator to learn about your eligibility.