HomeFinancePersonal FinanceCan you opt for a home loan to construct your house?

Can you opt for a home loan to construct your house?

The quantity of home loans that one can take depends on the borrower’s revenue.

In the last couple of years, the accessibility for these hunting to invest in/create a home for self-occupation or investment purposes has enhanced.

While applying for a home loan the borrower’s revenue and repayment capacity are the two most critical aspects. Experts say, most banks and non-banking economic corporations (NBFCs) have loan eligibility calculators on their sites to ascertain if one is eligible to take a home loan.

Some of the important eligibility criteria to take a loan to construct a home consists of:
● Age Bracket – 21 to 65 years
● Occupation – Salaried or self-employed
● Minimum salary/revenue – Rs 25,000 per month
● Minimum Credit Score – 750
● Loan Tenure – 5 to 30 years

Note that, these are some of the common criteria for most lenders – based on the borrower and several other aspects like credit history, credit score, lenders approve the loan.

What is the quantity that can be borrowed?
The quantity of home loans that one can take depends on the borrower’s revenue. Usually, the maximum loan one can take is 80 per cent of the house worth and the remaining will have to be a down payment.

Having mentioned that, Dipika Jaikishan, Co-founder and COO of Basis, says, “The EMI should not exceed 60-65 per cent of one’s income. If a borrower could have a co-applicant, his/her income can be considered by the lender to increase the loan amount.” Additionally, she points outs, “if one’s need for a loan may not be as high as 60-80 per cent of the amount, he/she can access smaller amounts such as Rs 2-5 lakh through home loans.”

Can one opt for a home loan to construct one’s home?
Borrowers who program to get a building loan must know that not all lenders provide loans in this category. Jaikishan says, “One should check with the bank first. Another point that borrowers should be aware of is that banks do not disburse the entire loan amount in one go and might provide the borrower with the money in tranches, depending on the progress of the construction work.”

She additional adds, “Borrowers should keep in mind that loans for home construction are not offered by all lenders. Hence, one needs to have enough time in their hands and do proper research to get the best deal.”

Additionally, even although banks and lenders provide loans up to 80 per cent of the house worth, some persons may will need a reduce quantity as a loan. Experts say, some banks/lenders may provide such loans, nevertheless, the interest on tiny loan amounts may possibly be greater. Jaikishan adds, “On the other hand, one can consider a personal loan for the same amount which might be more flexible in the pay-out.”

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