Construction loans or home construction loans provide funding for building properties, whether it’s your home or a real estate project. They help cover initial construction costs before obtaining larger funding. One can also avail a home construction loan for remodeling purposes. Due to the higher risk involved in these loans, construction loans might carry higher interest rates compared to conventional home loans.
Construction Loan Interest Rates
Home construction loan interest rates can vary based on factors such as the lender, the borrower’s creditworthiness, loan amount, and prevailing market conditions. Interest rates for construction loans might also differ from those for traditional home loans.
| Banks and NBFCs | Up to ₹30 Lakhs | ₹30 Lakh to ₹75 Lakhs | Above ₹75 Lakh |
|---|---|---|---|
| SBI | 8.40% – 10.15% p.a. | 8.40% – 10.05% p.a. | 8.40% – 10.05% p.a. |
| ICICI Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| HDFC | 8.35% p.a. onwards | 8.35% p.a. onwards | 8.35% p.a. onwards |
| LIC Housing Finance | 8.40% – 10.35% p.a. | 8.40% – 10.55% p.a. | 8.40% – 10.75% p.a. |
| Punjab National Bank | 8.45% – 10.25% p.a. | 8.40% – 10.15% p.a. | 8.40% – 10.15% p.a. |
| Bank of Baroda | 8.40% – 10.65% p.a. | 8.40% – 10.65% p.a. | 8.40% – 10.90% p.a. |
| Federal bank | 8.80% p.a. onwards | 8.80% p.a. onwards | 8.80% p.a. onwards |
| Union Bank of India | 8.35% – 10.75% p.a. | 8.35% – 10.90% p.a. | 8.35% – 10.90% p.a. |
| Tata Capital Housing Finance | 8.70% p.a. onwards | 8.70% p.a. onwards | 8.70% p.a. onwards |
*Note: The interest rates provided above are subject to change. Visit the bank’s/NBFC’s official website for the latest information.
Eligibility Criteria For Construction Loan
To avail of home construction financing, individuals need to satisfy the following criteria.
Eligibility for Salaried
- Age Limit: Ranges between 18 to 65 years.
- Citizenship: Must be an Indian citizen.
- Residence: A permanent residence in India.
- Employment: The borrower must be a salaried employee and working for the current employee for at least 1 year.
- Credit Score: Preferably a score of 750 or more.
Eligibility for Self-Employment
- Age Range: From 18 to 65 years.
- Citizenship: Indian citizenship is required.
- Residence: A permanent address is necessary. If the residence is rented, the applicant should have been living there for a minimum of one year.
- Employment: Self-employed individual.
- Credit Score: A credit score of 750 or above is considered good.
Not sure of your credit score? Check it now!
Construction Loan EMI Calculator
Calculate your EMI for your construction loan with this simple and easy to use loan EMI calculator. Just enter your loan amount, interest rate, and loan repayment tenure and get your EMI amount instantly! Calculate now!
Your Amortization Schedule (Yearly/Monthly)
The specific documents required for construction loans can vary depending on the lender and the type of construction project. However, here is a general list of documents commonly required for construction loans:
| Categories | Documents Requires for Home Construction Loan |
|---|---|
| Proof of Identity | Any one of the following: – Aadhaar Cards – PAN Card – Passport – Voter ID Card |
| Proof of Address | Any one of the following: – Aadhaar Card – Utility Bill – Valid Passport – Voter ID Card |
| Proof of Income | Tax Returns (ITR) and income calculations for the individual applicant and the business entity over the past three assessment years, verified by a CA. |
| Financial Statements | (If business) Balance Sheets, Profit & Loss (P&L) statements, and Annexures/Schedules for both the applicant and the business entity over the past three years, certified by a CA. |
| Bank Statement | Account statements for the applicant and the current account statements for the individual or business entity, covering the last six months. |
| Property Documents | – Title Deeds – Estimate for construction – Photocopy of the plan sanctioned by Local Authorities – Encumbrance certificate |
| Additional Documents | – Duly filled application form with passport-size photographs of the applicant/applicants – List of shareholders – Partnership agreement for the business – Proof of own contribution – Bank statements showing payments for existing loans – Cheque for the processing fee made out to the lender |
*Please Note: The lender reserves the right to request additional documents in accordance with their policies.
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Features of Construction Loan
Home construction loans come with attractive features and benefits. Check out the major benefits of construction loans:
Steps to Apply For Construction Loan
You can also take a personal loan for home construction or renovation purposes. Try Buddy Loan Personal Loan. Follow these easy steps and submit your loan application today.
- Step 1: Visit buddyloan.com or Download & install the Buddy Loan app (Android or iOS).
- Step 2: Open the personal loan application page. Provide the mobile number and enter the received OTP.
- Step 3: Specify the desired loan amount & personal email. Next, choose the Personal Loan option
- Step 4: Choose the employment type (Salaried, Self-Employed, or Student) and the salary mode (bank or cash).
- Step 5: Enter your work details (Including company name, years of service and Designation)
- Step 6: Provide your personal information (Including Full Name, PAN, address DOB & Gender)
- Step 7: Fill out the details of your communication address and income, then click ‘Submit’.
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