A home construction loan is a loan taken if you own a plot and plan to carry a new construction or renovation on the existing house. if you plan to expand your house and build one additional floor on your house; you can go for the construction of the house by taking a home construction loan.
The Home Construction Loan disbursement depends on the stages of construction of the house. Process of home construction loans is slightly different from other common Home loans provided for housing.
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Home Construction Loan – Features & Benefits
Tax benefit
Home Construction Loan borrower can claim tax benefit on the principal loan amount and interest paid on the home construction loans under Sec 80C and Sec 24B. Under the Sections, the borrower can claim tax benefits up to Rs. 2 Lakhs on the interest and Rs. 1.5 Lakhs on the principal loan amount.
Longer tenures
Home Construction Loan is available for long tenures and that can be between 5 to 30 years which makes the EMI of Home Construction Loan on the borrower is less and the loan is affordable.
Top-up Loan
Borrower can opt to take a top-up loan as a home construction loan on your existing home loan.
Balance transfer
Most of the banks & NBFCs provide balance transfer on home construction loans as they do BT for home loans. The borrower can opt Balance Transfer outstanding balance of loan to other banks or NBFCs as if he feels the current Bank is charging a higher rate of interest.
Home Construction Loan Eligibility
| Eligibility Criteria | Requirement |
| Age | Minimum Age: 18 years and Maximum Age: 70 years |
| Resident Type | The applicant must be (any one): > Resident Indian > Non-Resident India (NRI) > Person of Indian Origin (PIO) |
| Employment | The applicant can be (any one): > Salaried > Self-employed |
| Net Annual Income | At least Rs.5-6 lakh depending on the type of employment |
| Residence | The applicant must have (any one): A permanent residence A rented residence where he/she has resided for at least a year prior to applying for a loan |
| Credit score | A good credit score of at least 750 or more obtained from a recognised credit bureau |
Documents Required
| Document | Salaried Individuals | Self-Employed Individuals/Professionals |
| Identity Proof | Valid Passport copy/Valid driving license copy/Andhra Card | Valid Passport copy/Valid driving license copy/Andhra Card |
| Residence Proof | Ration card copy/ electricity bill/passport copy | Ration card copy/ electricity bill/passport copy |
| Signature Proof | Pan card copy | Pan card copy |
| Date for birth proof | Valid Passport copy | Valid Passport copy |
| Proof of office address | – | Electricity bill/ telephone bill |
| Proof of Business | – | Shop & establishment Act (as applicable in your state) |