People can avail of home loans to get their house constructed- either by themselves, or by employing a contractor to construct the house on a plot they own. Such loans are commonly termed as ‘construction loans’. The process of approval and disbursement of a home loan for self construction is different from that of a regular home loan.
Altum Credo will extend the loan for construction of the house on a self-owned plot under this service.
The minimum loan amount under home loans for self construction is capped at Rs. 3 Lakhs. The maximum loan amount for the same goes up to Rs. 10 Lakhs.
The minimum tenure is 5 years and the maximum tenure offered under home loans for self construction is 15 years.
We look at certain tips for obtaining a loan for constructing a house on a self-owned plot of land.
Loan amount: If the land is free from loans, even 100% construction funding can be available. The banks compute the loan amount as per the market value of the plot. They accept the value of the land as self-contribution for availing of the loans.
Ownership status of the land
The ownership – the title holder(s) of the plot is the most significant issue. The land could have been purchased from an independent land owner/developer. It could have been inherited from the present owner’s ancestors.
Basic facilities/amenities available
Gated communities are preferred by lenders. If the plot is within a gated community with standard facilities already present such as water and electricity connection, roads laid then it is simpler to obtain a loan.
The plot should possess all necessary clearances from the local town-planning authority as well as government. It should not be in agricultural or commercial or green zone. If it does fall into the mentioned categories, funding is not possible as per conventional criteria for home loans.
It is mandatory to have a sanctioned plan from the concerned town-planning authority or the corporation of the city. Tax dues on the land should have been cleared completely.
Usually the loan disbursement is in tranches. For instance if 50% of the construction is completed, 50% of the loan funds will be released. If the funds disbursement is in advance, only on a valuation person’s report that the disbursed sum has been used for construction and satisfactory progress is made will the next tranche be released.