An array of housing loans are available for real estate consumers. You can avail a loan to purchase an already constructed, under construction or even under project launch stage house, or apply for a home loan to construct a house according to your requirements. Following are some of the tips to note while applying for a loan for home construction:
Eligibility and papers: If you are planning to avail a home
construction loan, it is advisable to first get yourself pre-qualified for it.
This way, you can get some of the best home loan deals. Also, do all the
paperwork required to pre-qualify for a home construction loan, including the
details of the construction project, references, proof of employment, bank
statements, and recent credit report.
Sanctioning: By getting a home construction loan sanctioned,
don’t think if you are qualified for getting an X amount of loan disbursed, the
same will be issued to you, when you ultimately request for it. The actual loan
amount eventually issued to you may vary as lenders decide the final amount
only after a thorough verification of all the records you provide them. It is
advisable to arrive at a rough estimate of the cost of home construction and
file an application for the required amount with a bank or housing finance
company, stating the estimated construction loan budget.
Banks offering home construction loans
If you do proper research and legal work, you can obtain a
home construction loan from the best banks in the country.
Some of the major banks that provide home construction loans
include State Bank of India, United Bank of India, Canara Bank, Bank of Baroda,
HDFC Bank Ltd, ICICI Bank Ltd, Mahindra Finance, UCO Bank, etc.
If you are wondering whether you should lock in your
construction loan before you start building or let the interest rate float, one
school of thought suggests if the rates are heading upward, lock. If the rates
are on downward spiral, go for floating rate. However, if it is a long term
loan with several years in tenure, it should not matter as floating rates can
both rise and fall in that span of time.
If you have no previous experience building a home, it would
be best to hire a builder/supervisor with a good reputation and track record,
to supervise the building of your new home. The builder/supervisor may help you
with the cost breakdown and manage the subcontracting on an as needed basis.
The estimated cost breakdown is one of the most important
forms in the construction loan package. This is the breakdown of each
particular cost of construction of the home, such as the foundation, lumber,
framing, plumbing, heating, electrical, painting, and builder's profit, etc.
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