If you are planning to do construction on a piece of land you own for a residential or commercial purpose but hesitating due to financial issues related with the construction, then construction loan is the thing for you. The construction loan is the loan provided by the banks and other institutions to you for construction. Today almost every bank or financial institution available provides their customers with construction loans as they are more secure then any other loans available in the market.
Also, there are options for the type of interest rates you want. One option is Fixed-Rate of interest and other option is Floating-rate of interest.
Banks/NBFCs providing construction loans in Delhi NCR
Banks/NBFCs that provide construction loans in Delhi, (NCR) i.e. Noida, Ghaziabad, Faridabad, Sonipat and Gurgaon are
- State Bank of India
- Punjab National Bank
- Axis Bank
- ICICI Bank
- HDFC Bank
- HSBC Bank
- Canara Bank
- Punjab & Sind bank
- Dena Bank
- Yes Bank
- Standard Chartered Bank
- Karur Vysya Bank
- Barclays Finance
- RBS Bank
- Fullerton India
- Kotak Bank
- Andhra Bank
- ING Vysya
- Corporation Bank
- United Bank of India
- Vijaya Bank
- Bank of Baroda
- Bajaj Finance
- Dhanalakshmi Bank
- IDBI Bank
- Karnatka Bank
- Oriental Bank of Commerce
- Union Bank
Construction Loan EMI calculator
Construction EMI calculator is software which helps you calculate the EMIs related to your construction loan according to the amount of loan, rate of interest and the time period for which you want to take the loan.
Construction Loan Interest rates
Depending on the bank you are taking home loan from and other construction loan related factors, the average interest rates (reducing)may vary from 10.5% to 14.5%.
Loan lending banks or financial institutions charges 0.5% to 1% of the loan amount as processing fees, but there is a limit of Rs 10,000 only as the processing fee.
If you want to pay your full amount of the loan before the decided time limit then banks charge from 0% to 2% of the loan amount as pre-payment penalty.
Construction Loan Advantages and Disadvantages
Advantages of construction loan: –
No Waiting: – if you take a construction loan then you will able to construct on the land without waiting to have for savings to reach a level where you can do the construction.
Tax Benefit: – Government provides a tax benefit on your income tax if you are paying a construction loan.
Less interest rate: – Interest rate on construction loans is comparatively lower.
Disadvantages of construction loan: –
Long tenure: – tenure for repayment of the loan is often very long.
Changing interest rate: – Interest rates for a construction loan are bound to change with every change market interest rates.
In case you are unable to repay your loan, you are set to abandon your construction.
Construction Loan eligibility criteria
Construction loan eligibility factors are: –
Your income: the better your income is, the more eligible you are for a construction loan. Meaning the more you earn more construction loan you will get.
Tenure of loan: the more time you intent to take to repay your loan the more you are eligible for the loan, a maximum tenure of up to 20 years are provided by the banks.
Location of property: location at which you want to do the construction is also a key factor in loan approval by banks. There are often areas for which banks don’t provide construction loan.
Existing loan: If you have an existing loan or loans then banks will decrease the loan amount accordingly. Banks can only take up to 40% of your income as the EMI, so if you have already taken a loan and for example your 20% income is already going as its EMI then your construction loan amount will decrease accordingly.
Credit history: your credit history is also checked before granting you loan by the bank, if you have a bad credit history you may not be eligible for a construction loan.
Construction Loan Documents Required
Documentation required for construction loan:-
Valid identity proof
Valid residence proof
Valid age proof
Valid signature proof
Valid Income proof
Loan Application letter with recent photographs
Post dated cheques(pdc)
Valid business continuity proof (I.T. returns or bank certificates)
Documents related to the property you want to do construction at.
Construction Loan approval process
Construction loans are processed in a very quick, easy and effective ways. First you go to the financial institution you are interested in getting loan from. Then you present their representatives with the plan of construction, he will tell you about the documents required by them. After you provide them with the required documents a financial verification visit is given at your address by the institute’s representatives. After they are satisfied, your loan is approved and an instant construction loan is provided to you.
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Applying for a Construction loan? Contact us for a hassle-free construction loan with best interest rates and best deals available in the market.