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Home Loan: Everyone has a dream of owning a home, especially for middle-class people. This is an important goal. Due to rising property prices, it has become difficult to build a home without taking a bank loan. A home loan is easily available to buy a house, but if you have land and you want to build your house on it, that is, how will you get a home loan to build a house, and what conditions will have to be fulfilled?

The trend of building a house by buying a plot is increasing in big cities, although the process of home loan in this is a bit complicated. Usually, people buy flats for which a home loan is easily available. Banks give construction home loans to build a house on your plot. The money for a home loan for a flat goes directly to the builder, while in a construction loan, the money is given to the customer, due to which the process is a bit different.

Difference between home loan and construction home loan-
Its entire process is different. 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 the terms of service. Not only this, but there is also a difference in the interest rate, payment by the bank and the way of paying EMI. We will tell you step by step how you can take a home loan to build a house.

First of all, gather the documents-
Some special documents are necessary for construction home loan. First of all, you have to show the documents of ownership of the land, such as registry papers. If the land is ancestral, then you will also have to give an encumbrance certificate, which proves that there is no legal obstacle on the land. The loan is easily available on freehold land, whereas a long-term lease is necessary for leased land.

Apart from the land papers, KYC and income proof will also have to be given to the bank. Apart from 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. The estimate of how much it will cost to build the house should also be certified by an Architectural Engineer. Only after seeing all these documents, the bank will start the process of your loan.

Money is received in installments-
If all your documents are correct and the plot has also been inspected by the bank, then the loan will be approved. It is worth noting that in the case of construction home loan, you do not get all the money in lump sum, but as your construction is completed. Banks also keep giving you the loan money.

Money only when construction starts-
The person taking this type of loan should keep in mind that until the work of building a house on your land does not start, the bank will not give you a single rupee. Once the construction starts, the bank will send its employee to certify it. Along with this, photos of the house construction and a certificate of the estimated period of construction of the house from the engineer or architect also have to be submitted to the bank. The bank will send its technical staff to verify these photos and the loan amount will be given only after inspection.

How much interest and tenure-
Generally, the tenure for construction loan is also the same as that of home loan. Government NBFC LIC Home Finance (LIC HFL) currently gives construction home loan for 30 years at an interest rate of 9.10 percent. Similarly, HDFC Bank also gives construction home loan at an initial interest rate of 9 percent, which can be for 30 years.

How much loan will be available-
While taking a construction home loan, it is important to keep two main things in mind. First, the value of your property. Usually, you can get a loan of 80 to 90 percent of the cost of the land on which you are going to build a house. Another important thing is that your monthly EMI should not exceed 40 to 45 percent of your salary. Banks will not accept EMI more than this. Therefore, while taking this type of loan, ensure that the EMI is set according to your monthly income. Apart from this, your CIBIL score should also be good.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.