Home construction loans in India!

The home construction loans are different from the loans that are used to buy already existing homes. A loan used to purchase an already constructed home, use the home as collateral for the payment of the home loan. They take the ownership of the house in case you fail to repay the loan amount.

With the home construction loans in India, there will be no home to use as the collateral because the home is still to be constructed. In such cases, the bank or the private financial firm will have your word as a guarantee for the payment of the home loan.

The disbursal process of the home construction loan is different compared to the normal home loan. The bank will disburse the amount in parts considering the progress of the construction. You will have to specify the time taken to complete the house construction.

Typically, the easy home loans to construction new house are disbursed in 20 percent increments. 25 percent of the home loan amount will be given to you when you complete 25 percent of your construction. You need not make any payments of your home construction loan until you receive the complete loan amount.

There is a list of documents you must provide to your lender to avail the home construction loan income proof being the most important document. You can still apply for the loan if you do not have complete paperwork. There are private home finance companies which can help you with the home loan you need.

The interest rate they charge can go up compared to the standard market rates as they are giving you the loan without documents. You can also avail the home loan top up on your existing home loan to do the home furnishings.