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Construction Home Loan: Know which documents are required for construction home loan..
Every person has a dream of building his own house. Especially the middle class starts dreaming of building a house as soon as they get a job. But, due to rising property prices, it has become impossible to own a house without taking a loan from the bank. To buy a house, we easily take a home loan from the bank, but what to do when you have the land and want to build your own house on it? That is, how will you get a home loan to build a house and what conditions will be required to be fulfilled?
It is difficult to get one's own house built in big cities. Some people live on rent but many people dream of building their own house. Nowadays, the trend of building a house by purchasing a plot is increasing rapidly even in big cities. But, the problem with building a house on your own land is that the process of taking a loan is a bit complicated. In big cities, people generally buy flats, for which it is easy to take a home loan. Banks provide construction home loans for constructing a house on one's own plot. Keep in mind that the money for a home loan for a flat goes directly to the builder, whereas in the case of construction, the money goes to the customer.
First, know the difference between a home loan and a construction home loan.
The entire process of this loan is different. Let us tell you that a construction home loan is completely different from a flat or ready-to-move home loan. There is a lot of difference in the amount received and service conditions. Not only this, there is also a difference in the interest rate, payment from the bank, and methods of paying EMI. We will tell you step by step how you can take a home loan to build a house.
Collect the necessary documents at the beginning
Let us tell you that some special documents are required for construction home loans (Documents required for construction home loans). In this, first of all, you have to prove that the land on which you are going to build a house is registered in your name only. That means the papers of that land will have to be shown to the bank. If you have purchased it recently then only the registry paper will suffice, but if it is ancestral land then you will have to give an encumbrance certificate to the bank also. This certificate is proof that there is no outstanding or dispute on your land. The loan is easily available on freehold plots, whereas, in the case of a lease, you should have a long-term lease.
To take a loan, apart from land documents (land documents for taking a loan), you will also have to give KY and income proof to the bank. Along with this, the plan and layout of the house will also have to be given to the bank. Your layout should be approved by the local body, authority, or gram panchayat. An estimate of how much it will cost to build a house should also be certified by an architect-engineer. Only after seeing all these documents the bank will start the process of your loan.
The bank will give the money in installments
If all your documents are correct and the plot inspection by the bank has also been completed, then your loan will be approved. It is worth keeping in mind that in the case of a construction home loan, you do not get all the money in a lump sum, but as your construction is completed. Banks also give you loan money.
Money will be available only when construction starts
Anyone taking a construction home loan must keep in mind that until the construction work of the house starts on your land, you will not get a single rupee from the bank. Once the construction starts, the bank will send an employee to endorse it. Along with this, a photo of the house construction and, a certificate of the estimated period of construction of the house from the engineer or architect also has to be submitted to the bank. The bank will send its technical staff to verify your photographs and you will receive the loan amount only after inspection.
Know how much the loan tenure and interest
For your information, let us tell you that the tenure for a construction loan is generally the same as for a home loan. Government NBFC LIC Home Finance (LIC HFL) currently offers construction home loans for 30 years at an interest rate of 9.10 percent. Similarly, HDFC Bank also offers construction home loan at an initial interest rate of 9 percent, which can be for 30 years.
You will get this much loan
It is very important to keep two things in mind for Construction Home Loan. First of all, what is the value of your property? For example, you will get a loan for 80 to 90 percent of the cost of the land on which you are going to build a house. But now the important thing is that EMI should be only 40 to 45 percent of your salary. Banks will not accept EMIs more than this. Therefore, while taking this type of loan, you will have to keep in mind that the EMI will be decided every month only on the basis of earnings. Secondly, your CIBIL score should also be good.
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