A home construction loan is a loan for people who own a piece of land in their name and need financial aid to construct a home over that particular property. A home construction loan allows one to smoothly manage all of the expenses involved in the construction process. This loan has a repayment duration of up to 30 years.
Types of home construction loans:
⦁ One-time closure loan
This is one single loan that takes care of the construction part. The loan pledge in this case is a mortgage on the future completed building.
⦁ Two-time closure loan
This includes two separate loans where you get a bit of a higher rate for the construction. As soon as the construction process is complete, the loan is then refinanced for a mortgage that is long-term, for the completed house.
Once the eligibility criteria for taking a home loan are met, you can pay the loan amount either in installments or as a lumpsum amount.
Here are the eligibility criteria for a construction home loan:
⦁ Age – 21 to 70 years
⦁ Work Nature – Salaried individuals/ self-employed
⦁ CIBIL score – 750 or higher
⦁ Nationality – Indian
⦁ Income – A minimum income of INR 25,000
If the individual meets the eligibility criteria as listed, here are the documents that will are mandatory for the construction home loan to be processed:
⦁ Identity Proof:
⦁ Aadhar Card
⦁ PAN Card
⦁ Passport
⦁ Voter’s Card
⦁ Driving License
⦁ Address Proof:
⦁ Bank statements
⦁ Passport
⦁ Voter’s Card
⦁ Utility Bills
⦁ Aadhar Card
⦁ Property Tax Receipt
⦁ Income Proof:
⦁ Income Tax Returns
⦁ Salary slips for the latest 3 months + salary account statements + appointment letter (for salaried persons)
⦁ IT Returns
⦁ Salary account statements for the latest 6 months
⦁ Business commencement registration certificate
⦁ Latest 3-year P&L projection statement
⦁ Property related documents:
⦁ Title deeds
⦁ Estimated construction cost
Some additional documents that a lender may ask for:
⦁ License certificate of the builder
⦁ Detailed house plan
⦁ Value appraisal by a qualified 3rd party appraiser
⦁ Ownership document of the piece of land
⦁ Building permission from the concerned authorities
To make the home loan process seamless and fool-proof, conduct a thorough background check on available lenders to ensure reliability, transparency, and a smooth process from start to end.