17-Jul-2021 |
Everyone aspire to live in their own dream house. The experience will surely be more wonderful if one has planned to build their own house instead of buying a ready to move in. To fulfil these dreams and make you live this wonderful feeling, several housing finance companies offer home construction loans.
Here’s a detailed guide that explains what a home construction loan is, the types of home construction loans, the process of getting one, and the advantages of taking a home construction loan.
What is a Home Construction Loan?
A Home Construction Loan is a type of Home Loan, which you get for constructing a house of your own instead of purchasing a ‘ready to move’ residential property. The loan amount would be disbursed in phases as per stage of construction. Further, you need to provide a detailed construction plan, an estimate from the architect, an approved map etc. to apply for a home construction loan.
After the loan gets approved, the site under construction will be inspected by the lender or they may send a third party team of technicians for visiting and examine the same.
What are the types of Home Construction loans?
There are 2 types of Home Construction Loans
1. Self-Construction Loan: You can opt for this loan if you have purchased a land/plot or if you already have a land/plot in your name and you need funds to construct a home.
2. Plot Purchase and House Construction Loan: A borrower can also opt to purchase land and construct a house on the same. However, the borrower has to put in their contribution first.
The borrower must follow the following steps to apply for the home construction loan.
Step 1: The borrower needs to fill the application form first
Step 2: The applicant must submit all the necessary documents like property documents, KYC, income documents, bank statement, Form 16 etc.
Step 3: After successful submission and approval, the loan amount is then disbursed in tranches as per the construction stage to the borrower's bank account.
Benefits of a Home Construction Loan?
To conclude, if you are looking for constructing a home or buying a plot plus constructing a house as per your requirement “home construction loan” is the loan for you.