Constructing a home from scratch is an exciting and a once-in-a-lifetime experience. Say, you invested in a piece of land about a decade ago with the dream of building a home on the plot at some point in life. Perhaps, you feel that the time has come to finally construct your house and bring your vision to reality. But what’s lacking is the necessary finances needed to cover the expenses of the project. That’s when you need a home construction loan.

What is a home construction loan?

A home construction loan is a short-term secured financing option that can be used to cover expenses linked with building a house from start to finish. home construction loans include the costs of drafting plans, securing permits, and paying for materials and labour. You can also use a home construction loan to gain access to emergency funds – if you are informed by your contractor that the expenses of your project are exceeding what was planned.

How to acquire a loan for home construction without any hassle?

1. Maintain your credit score: If the applicant’s credit score is high, there are more chances of getting a Home Construction Loan sanctioned instantly and easily.

2. Consider your eligibility: When you apply for a home construction loan with a financial institution, your eligibility is determined based on your income and repayment capacity. Before you apply for a loan for home construction, calculate your eligibility and EMI.

3. Keep your construction budget and property documents handy: The lender will examine all relevant documents like income statements, KYC, property documents, detailed construction plan, an estimate from the architect, and an approved map before sanctioning the loan for home construction.

4. Hire reputed contractors: You will need to prove to the lender that your builder and architect are qualified, insured, and licensed. This may include providing documents of the builder’s insurance certificates and proof of financial stability. You must also list down information about each party’s responsibilities, including the contractor, architect, and others involved in the project.

5. Keep some room for additional expenses: At the time of building your home, there can be some unforeseen costs that might increase the total cost. For instance, the cost of sand or cement could fluctuate during the construction phase. For this reason, you need to assure the lender that you can bear any additional costs that may arise at the time of home construction.

What are the benefits of a home construction loan?

1. Flexible terms: Although financial institutions require an exact plan for your project, rest assured that when you secure a home construction loan, you will get the advantage of flexible guidelines that other traditional loans do not provide. This allows you to alter your loan terms as per project needs.

2. Pay just the interest during construction: When it comes to a home construction loan, you do not have to pay out the loan entirely until the construction is complete. During the construction, you only need to pay interest on your loan. This gives you an extended duration to save up for the repayment that would commence in the near future.

How to choose the right lender for your home construction loan?

There are many factors to consider when choosing a home construction loan lender. Ensure you choose a lender that meets your unique requirements by asking some important questions. First, check what kind of home construction loans the financial institution offers – whether it is a construction-only loan, construction to permanent loan, renovation loan, or owner-builder construction loan. For those planning to construct a house in their hometown, verify if the lender provides home construction loans for rural areas like how DMI Housing Finance provides. Likewise, if you are based in a metro or tier-II city, check if the lender provides home loans in your city. For instance, DMI Housing Finance has branches in Ghaziabad, Indore, Haridwar, Jodhpur, Delhi, Kanpur, and similar cities and provides easy and quick home loans for all the major locations of these cities. Most importantly, identify the interest rates that the lender is offering and whether they are fixed or variable.

The bottom line

By taking into consideration the factors that contribute to obtaining a home construction loan, you can create a financial support path with ease and at the right time.

Whether it’s a home construction loan, home extension loan, or home renovation loan, a reliable financial institution like DMI Housing Finance can help you get there. Identify all the options, shortlist the best type of loan for your specific needs, and apply for low-interest rate instant approval home loans by visiting the DMI Housing Finance customer portal.