While people can use a home loan to build their home, the process for approving and disbursing such a loan is different from a regular home loan.

1 bhk flat for sale in kharghar, people usually take out mortgages to buy a home that is ready to move or to book a home under construction. However, people can also take out home loans to build their homes – either by themselves or by hiring a building contractor – on their land. These loans are commonly referred to as “construction loans”. The loan approval and disbursement process is different from a normal home loan.

Requested documents

In addition to the usual Know Your Client (KYC) formalities and income, in order to use a mortgage to build a home on your own land, you will need to provide the prospective lender with all relevant documents establishing title and ownership. land.

A plot of land can be a non-proprietary plot of land or can be assigned by any development agency such as CIDCO, DDA, etc. time. You will also need to provide proof that there is no property charge.

In addition to site documents, you will need to provide a floor plan and proposed house layout, duly approved by the local municipal government or gram panchayat.

You will also need to provide a construction cost estimate certified by a civil engineer or architect. Based on these documents, if the lender is satisfied with the suitability of the general loan and the appraisal you provide, they will regularly authorize a home loan.

Monetary margin

As with any home loan, the borrower will have to deposit money on margin to build a home, depending on the mortgage amount required. When calculating your contribution, the cost of the site is also taken into account if it was recently purchased. However, the cost / value of a package is not taken into account when calculating your contribution if it was inherited from you, received as a gift or purchased a long time ago.

Credit issuance

The issuance of a building loan takes place in installments and the money is released according to p.work progress, as happens when you book an apartment under construction with a developer.

However, the lender will not pay any amount until you provide your contribution as agreed and provide proof of it. To take advantage of bank payments, you must provide photographs of the house and a certificate from an architect or civil engineer on the completion stage of the house.

The lender may rely on the certificate and photographs provided by you, or may decide to appoint a technical person to verify them. So if the construction is completed quickly, the lender’s disbursement of the money will also be quicker.

Major lenders such as SBI, HDFC Ltd, ICICI Bank and others are active in the construction loan segment. However, not all mortgage lenders will make construction loans equally. Some lenders find it inconvenient to finance such self-built properties.

SBI real estate loan for construction

The public bank SBI provides a mortgage for the construction of a house. You can also get a loan to build a house on land funded by SBI Realty. Borrowers should ensure that home construction takes place within five years of the loan approval date. The maximum loan amount that can be offered to a client can be up to Rs 15 crore with a term of 10 years.

 

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