Constructing your own home can be a great experience. However, the process can also turn out to be very expensive. Given the increasing expenses these days, most people can’t afford to bear the total cost of constructing a home on their own. Here, Home Construction Loans are a viable option to consider. This article gives you insights into why you should consider taking a Home Construction Loan, whether you qualify for such loans or not and how to apply for them.
A Home Construction Loan is usually a short term loan which you can use to pay the expenses of constructing your house. It is typically offered for a specific time period, allowing you enough time to build your residence. When the construction is done, you can pay off the loan in accordance with the policies agreed upon. Let us start off by looking at the eligibility criteria for availing a Home Construction Loan.
Eligibility for a Home Construction Loan
The eligibility requirements for Home Construction Loans may vary slightly from company to company. Here are some general eligibility criteria which most companies require you to meet:
- You should be a resident of India.
- You should be above 25 and below 58 years of age.
- You should be a working and salaried person, with at least three years of work experience.
- The minimum amount for the loan is usually around Rs. 30 lakhs. The maximum amount is typically around Rs. 10 crores.
Please note that the minimum net salaries and the property values will vary from city to city.
Now, let us consider the benefits of taking up a Home Construction Loan.
Major Benefits of Home Construction Loans
- A Home Construction Loan makes bearing the home construction expenses significantly easy.
- The rate of interest of a Home Construction Loan is much lower than other kinds of loans personal loans, mortgage loans, or vehicle loans. This ensures that you are not overburdened with financial liabilities.
- It is also relatively easier to get a Home Loan as compared to other loans. The eligibility criteria that you have to meet in order to get a Home Loan are much more relaxed in comparison to those of other loans. Home Construction Loans also usually get approved easily on behalf of assets or collaterals.
- Most Home Construction Loans come with some great tax benefits. These loans are especially useful for individuals who come under the higher tax bracket. You can show the interest on the loan as a deduction of tax when you file your income tax return.
- Another great benefit of getting a Home Construction Loan is capital appreciation. Since, property prices rise more quickly than interest payments on a Home Construction Loan, they are a very good financial solution.
So, you can see that Home Construction Loans have many benefits and can provide you with a great financial benefit if used properly. Now, let’s talk about some very important tips for choosing the Home Construction Loan that fits you best.
Tips for Choosing a Home Loan
- You should choose a Home Construction Loan which offers nil foreclosure and prepayment charges in case you would like your debts cleared before the completion of the tenure.
- Check out and compare the policies of different companies pertaining to Home Construction Loans.
- Examine the rates of interest, processing fees, and other such charges, and make a comparison between the charges of different companies before arriving at a decision.
How to Apply for a Home Construction Loan
Applying for a Home Construction Loan is quite easy. Here are the standard steps which are usually followed to apply for one:
- You need to fill in your personal, financial, and employment details.
- The next step is to view the loan offer. You can check out the offers available for you based on your eligibility.
- The application will then ask for details pertaining to your property.
- Following this, you will be needed to pay the secure fee, in order to reserve the offer which is calculated for you. Have your documents ready and upload them online, in order to complete your application.
You can also access your account online on the company’s official website. This will allow you to track repayments, payment schedule, interest certificates, and also view other important information.
A Home Construction Loan is a wise choice if you wish to ease your home construction expenses. Before you apply for such a loan, check out the terms and conditions and opt for a Home Loan which suits your needs and circumstances.