A Home construction loan is the loan amount which lends to the person who wants to construct a building over a plot. The advantage of opting for a construction loan is that the lender needs not to withdraw all the money a tone. Rather, he/she can get the money in parts as per the phases of the construction. Also, the person needs not to return the full amount, but only the amount which has been used in the construction.
Majorly, there are two types of construction loans which one can opt for:
It comprises of two separate loans. The first part of the loan is lent to the person when the construction is carrying out. Next, the loan is paid to the person to clear out the debt for the construction.
It can also be known as a two-in-one loan where while the lender uses the loan for the construction of the house, later when he/she shifts to another house, the loan balance is converted into mortgage balance.
One needs to adhere to certain compliance and criteria to be eligible for the construction loan such as:
For working individuals
For Entrepreneurs/self-employed applicants
Some of the documents which are required to get eligible for a construction loan are: