Home construction loan is the easiest way possible to seek funds for the construction of a house. Because you will have three options to choose from, multiple banks offering the loan with lower interest rates, etc. To know the 5 best ways for faster approval of a home construction loan, read this article.
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Home Construction Loan Overview
Home construction loan is a kind of home loan that helps get a loan for constructing a home rather than buying a flat. Over the progress of work, the lender provides you the money in particular stages.
If you are dedicated to seeking a home construction loan, you are required to provide a detailed & realistic construction timetable, an estimated construction plan & the expected budget for the construction to the lender.
Once the construction loan is got approved, the loan amount will be provided in stages considering the demand of the construction stage. The lender will inspect the construction site to note the work progress.
Types Of Home Construction Loan
The 3 types of home construction loan options available are
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Self Construction Loan
If you have bought a plot or already have one in your name & you require funds to build a house then you can choose a self-construction loan.
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Plot + Construction (P+C) Loan
If you have not purchased a plot & require funds to buy a plot & for the construction of a house as well, then a Plot + Construction loan will be the best option for you.
You need to know that if you want funds to purchase a plot & not have the plan to build a home then applying for a loan against property or a personal loan is the best option.
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Home Extention Or Renovation Loan
You can opt for a home extension loan if you want money to construct an extra floor or room to the existing house.
And you can also seek a home renovation loan – if you have a plan for major repair work, repainting your home, etc.
Home Construction Loan Eligibility Criteria
The following are the home construction loan eligibility criteria for salaried & self-employed individuals.
| Eligibility Criteria | Salaried Individual | Self-Employed Individual |
| Age | Minimum Age: 18 yrs
Maximum Age: 65 yrs |
Minimum Age: 18 yrs
Maximum Age: 65 yrs |
| Resident Type | Applicant must be:
OR
|
Applicant must be:
OR
|
| Employment | Individuals should be earning a salary. And he/she must be working for a minimum of 1 year under the present employer. | Individual must be
OR
|
| Residence | Individual must be
OR
|
Individual must be
OR
|
| Credit Score | Good credit report having a score of a minimum of 750 or more gained from a credit bureau. | Good credit report having a score of a minimum of 750 or more gained from a credit bureau. |
Home Construction Loan Documents Required
Documents required for salaried individuals to apply for home construction loans are mentioned below.
| Identity Proof (Any One) | Residency Proof (Any One) | Income Proof |
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| Property Documents | Other Required Documents |
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Documents required for self-employed individuals to apply for a home construction loan are mentioned below.
| Identity Proof (Any One) | Residency Proof (Any One) | Income Proof |
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| Property Documents | Other Required Documents |
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Home Construction Loan Interest Rates
Here are the beginning interest rates of home construction loans by Indian lenders.
| Name Of Lender | Beginning Interest Rates (per year) |
| Bank Of Baroda | 6.90% |
| State Bank Of India | 6.95% |
| Canara Bank | 7.40% |
| HDFC Bank | 7.45% |
| Aditya Birla Capital | 8% |
| Federal Bank | 8.05% |
| PNB Housing Finance | 8.50% |
| LIC HFL | 8.65% |
| ICICI Bank | 9% |
| Home First Finance | 9.50% |
| DHFL | 10.50% |
As every one thinks how will I pay the home loan EMIs if I loose the job or due to some other reason, for that you can check out How To Pay Home Loan EMIs If You Lose Your Job. It explains 7 ways you can easily pay your home loan EMIs in challenging scenarios.
Home Construction Loan Process
Here are the steps that you have to follow to apply for the home construction loan.
- Visit the official website of the lender from which you want to seek home construction loan.
- Search & open the home construction loan application on the website.
- Fill up the application with the correct information about personal & professional details. Such as name, gender, age, pin code of area, monthly income, etc.
- Later submit the form. Once your form is verified officials from the lender’s team will help you with the further process to follow to get the loan approved.
These are the process to initiate seeking a home construction loan. Further on the bank or lender will guide you through the process with every detail.
5 Ways To Get Home Construction Loan Approved Faster
Follow this process to get the home construction loan approved faster.
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Having A Higher Credit Score
The credit score holds the overall record of all your ongoing loans, past prepayment records, previous payment defaults, etc.
So, maintain a better repayment record because each default can have a negative impact on your overall credit score.
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Home Construction Loan Should Be As Per Your Eligibility
Lender will examine the loan eligibility based on the consideration of your earning & repayment capacity of yours.
Basically, the EMI amount of yours should not be more than 50% of your in-hand monthly salary. So, calculate the home construction loan eligibility & EMI prior to applying for a home construction loan.
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Keep Property Documents & Construction Budget Ready
Lenders should be able to have a complete understanding of your property, size of the constructing house, resources to be used for the construction, name & other significant details of the contractor who will be leading the construction of the project.
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Unite With A Reputed Contractor For House Construction
Collaborating with the reputed contractor will build trust with the lender. And this will work as a plus point for getting the approval for your loan.
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Be Ready To Have Extra Costs
There is the possibility that you may have to handle unforeseen costs in building your house. Such as a rise in the cost of raw materials like cement, steel, sand, etc during the construction of your house.
So, assuring the lender that you already have savings ready for such scenarios will work as a plus point for you.
FAQs
| What are the types of home construction loans?
Self-construction, P+C – plot + construction & home extension or renovation loan are the three types of home construction loans. |
| How I can get my home construction loan approved faster?
High credit score, considering your eligibility, keeping property documents & construction budget ready, uniting with the reputed contractor, & being ready for handling extra cost are the 5 best ways that will help you in getting your home construction loan approved faster. |
| What is the SBI interest rate for a house construction loan?
The beginning interest rate of the State Bank Of India for the house construction loan is 6.95%. |
| What is the HDFC Bank interest rate for a house construction loan?
The beginning interest rate of the HDFC bank for the house construction loan is 7.45%. |
