Here is how You can Get a Home Loan to Build a House
Jun 12, 2018 Home Loan
We all are quite aware of the home loan process to buy a home. Home loans are also available to construct a house but the process of approval and disbursement of such loan amount is different from that in case of a regular home loan. People can avail loan for construction purpose either by themselves or by employing a contractor to build the house on the plot they own. Such loans are referred as construction loans.
Let’s understand how.
In order to avail construction loans, documents related to income, KYC documents, relevant documents to establish title and ownership of the plot which can be either freehold or can be allotted by any development authority such as DDA etc. The loan can be also obtained for a leasehold land wherein the lease is for a reasonably long period of time. A no- encumbrance certificate is required related to the property.
In addition to the documents related to the plot, one also needs to submit layout and plan of the proposed house, duly approved by the concerned authority or local municipal authority along with the estimated cost of construction being approved by an architect or a civil engineer. If the lender is satisfied with all the submitted documents about the borrower’s eligibility and estimated the cost of construction then the lender will approve the home loan as per the usual terms and conditions.
Like other loans, the borrower needs to contribute the margin money to construct the house depending on the requested home loan. The cost of the plot is taken into account while calculating the borrower’s contribution. However, if the plot is inherited or received as a gift or purchased long back then the value of the plot is not taken into account while computing the contribution by the borrower.
Talking about the disbursement part, the loan amount for the construction purpose is done in parts, wherein the money is disbursed depending on the progress of the construction similar to the payment done in case of construction linked plan for under-construction projects. But the lender will not disburse any money until the borrower makes his or her own contribution as agreed and submit proof for the same. In order to avail the disbursements from the bank, the borrower will have to submit pictures of the house and certificated from a civil engineer or an architect related to the stages of the completion of the house.
The lender might or might not rely on the submitted photographs and certificate by the borrower or it might send its own technical person to check the same. Hence as quickly the construction of the house gets completed, the lender will also disburse the money faster. Several major lenders like HDFC, ICICI, SBI and others actively offer construction loans. But not all the lenders provide home loans for construction purpose.
In addition to the documents related to the plot, one also needs to submit layout and plan of the proposed house, duly approved by the concerned authority or local municipal authority along with the estimated cost of construction being approved by an architect or a civil engineer. If the lender is satisfied with all the submitted documents about the borrower’s eligibility and estimated the cost of construction then the lender will approve the home loan as per the usual terms and conditions.
Like other loans, the borrower needs to contribute the margin money to construct the house depending on the requested home loan. The cost of the plot is taken into account while calculating the borrower’s contribution. However, if the plot is inherited or received as a gift or purchased long back then the value of the plot is not taken into account while computing the contribution by the borrower.
Talking about the disbursement part, the loan amount for the construction purpose is done in parts, wherein the money is disbursed depending on the progress of the construction similar to the payment done in case of construction linked plan for under-construction projects. But the lender will not disburse any money until the borrower makes his or her own contribution as agreed and submit proof for the same. In order to avail the disbursements from the bank, the borrower will have to submit pictures of the house and certificated from a civil engineer or an architect related to the stages of the completion of the house.
The lender might or might not rely on the submitted photographs and certificate by the borrower or it might send its own technical person to check the same. Hence as quickly the construction of the house gets completed, the lender will also disburse the money faster. Several major lenders like HDFC, ICICI, SBI and others actively offer construction loans. But not all the lenders provide home loans for construction purpose.
Looking for property portal?
Related Articles
-
-
-
Know 5 Personal Habits for Your Credit Worthiness
Sep 17, 2018 -
Your Guide to the Tax Benefit on Multiple Home Loans
Mar 29, 2019
See comments (0)
Write a comment
