Constructing your own home awards joy that is unparalleled. Watching your dream home come to life in front of your eyes is an exciting journey, one that you can dictate at every step of the way.
But, even after setting your sights on the right plot of land, home construction can be arduous as it requires a significant amount of time and money. To provide respite from this stress, lenders today have rolled out home construction loans that are specifically designed for this purpose.
The key difference of a house construction loan from a standard home loan is that it is shorter in tenure and has incremental disbursal of money. Meaning, that the financial institution does not release the entire loan amount at once and disburses it according to the construction stages. Here is some crucial information you should keep in time when availing a loan for constructing a house.
Eligibility criteria and documents required
To get a loan for plot purchase and construction, you need to meet the eligibility criteria set by the financial institution. This includes passing some basic parameters such as having a good credit score, meeting the minimum age set by the lender, and fulfilling the annual or monthly income requirements. Moreover, if the property is co-owned by someone, then they must be the co-applicant for the loan.
The standard documents that are required include proof of residence, income and identity. Further, you will also need proof of land ownership, an estimated quotation of construction cost, NOC from relevant authorities and the approved blueprints and construction plan. To determine the home loan interest rates, you may also require other documents as specified by the lender.
Additional Read: Check out your Home Loan Eligibility Based on Salary
Salient features of home construction loan
• Incremental Disbursal:
The total loan amount is broken down into instalments and disbursed at regular intervals. The lender releases the loaned amount in increments, hinging on the progress of construction.
• Pre-EMI Payment:
Unlike standard home loan rates, you are required to make a pre-EMI payment on the total disbursed amount. This amount is separate from the actual EMI payment.
• Fixed Construction Plan:
Once the loan is finalised based on the construction plan, the plan cannot be changed. Therefore, it would be prudent to utilise tools like home loan EMI calculator to estimate the EMIs applicable on the loan amount, so that you can make the correct choice. An extension or reduction in the plans later might lead the lender to cancel the loan.
The tenure for construction loans is generally shorter than that of house loans, as the construction is concluded in a short period. You can avail online facilities like home loan calculators to calculate the tenure, EMI and interest rates in advance.
Additional Read: Home Loan vs. Home Construction Loan
For easy home construction financing options, reach out to Tata Capital and avail top-tier financial services. Tata Capital assures transparency at every step by providing EMI calculator for home loan and attractive interest rates.
Not sure if you qualify for housing finance?
Don’t fret! We offer comfortable home loan eligibility criteria to ensure that everyone can enjoy a hassle-free, quick disbursal process for buying the house of their dreams without delay.
For more details, visit the Tata Capital website today!