Home construction loans are secured loans used to build a new house on a vacant plot. Be it the expenses related to construction planning or finally executing those plans, you can utilise the funds to cover all of it. Moreover, due to its secured nature, you can expect the interest rates to be affordable.
Here are the various new home construction loan rates offered by reputed banks in India:
|Name of the Bank||Rate of Interest|
|HDFC Bank||8.60% onwards|
|Axis Bank||8.55% onwards|
|ICICI Bank||8.90% onwards|
One must follow these steps to apply for a home construction loan via online mode:
You can also visit the physical branch of an institution providing a home construction loan and apply for it. You need to fill out the application form and submit hard copies of the documents. After all the formalities are completed, banks will scrutinise your application before disbursing the loan.
Here is a list of features of a home construction loan:
Here are some of the essential benefits of taking a home construction loan:
Rate of Interest (P.a)
Loan Tenure (Years)
In order to make the most of these features and benefits, you need to meet the eligibility requirements first. Here are some basic parameters of a house construction loan you should be aware of:
Apart from these, some lenders might have additional requirements as well. Those parameters generally vary from one loan provider to another. Before submitting your application, make sure to go through the requirements on the portal.
Here are the documents required for construction loans:
Along with these, both salaried and self-employed applicants might need to provide some additional documents based on their profile and requirements. After meeting eligibility criteria and furnishing all these required documents, lenders decide on the loan amount and house construction loan interest rate.
You already know which eligibility criteria you need to fulfil in order to get a house construction loan. However, you also should be aware of the aspects that can affect your eligibility and lower your chances of getting the loan. Note that the rate of interest your preferred lender is offering might also change on the basis of these factors.
The factors are as follows:
As mentioned earlier, lenders generally have specific requirements for salaried and self-employed applicants. Depending on your monthly income, they will decide how much they can sanction to lower the risk of default on loan repayment.
Some financiers ask for at least 2 years of work experience in the case of salaried individuals, while self-employed applicants need to have at least 3 years of business vintage to qualify. Make sure to meet the lower limit or have more experience to easily qualify for the loan.
Having a low credit score and poor repayment track record is harmful to your loan eligibility. Lenders evaluate this score to understand how you have managed your past EMI payments, whether you have made timely payments or not, etc.
Look out for these factors and meet the requirements to increase the chance of getting prompt approval from your lender.
One must consider the following things before going for a home construction loan:
The cost of raw materials required for construction has been increasing with every passing day. Accordingly, constructing a house has become challenging from a financial standpoint. However, thanks to reduced house construction loan interest rates, you can now meet the cash requirements and build your dream home. Make sure to keep the aforementioned pointers in mind before going ahead.
Ans: It is not necessary to have a co-applicant when you are trying to avail a house construction loan. However, in case the concerned land has multiple owners, you must include them as co-applicants while availing the loan.
Ans: Both Section 24 and Section 80C of the Income Tax Act, 1961 deal with tax benefits on house construction loans. Apart from these, for first-time home buyers, additional benefits are available under Section 80EE of ITA. However, in that case, the total value of the house must not exceed Rs. 50 lakh.
Ans: The amount that you need to submit as a down payment for a house construction loan depends on both you and your lenders. Some loan providers ask for 20% of the total loan amount as a down payment, while some lenders may allow up to 25%.
Ans: Borrowers receive the home construction loan amount in parts. Lenders release the sum on the basis of the progress of the construction. The same process is applicable in case one avails such a loan for an under-construction flat.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
|Home Loan Interest Rate||Home Loan EMI Calculator||Home Loan Tax Benefits|
|Home Loan Prepayment Calculator||Minimum CIBIL Score For Home Loan||How to Apply for Home Loan|
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|Documents Required For Home Loan||Top Banks And NBFCs for Home Loans||Home Loan For Women|
|Home Construction Loans||Home Loan Sanction Letter||Loan Against Property Interest Rates|
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