A category of home loan that is becoming popular in India day by day is house construction loan. This particular financing service allows you to get your home constructed while being able to generate funds from banks or other institutes.
It is a quick financing option which is offered by almost every institute irrespective of its size. Moreover, the same can even be borrowed with the help of government financing agencies. In case you are looking to know more about home construction loans, then here are its primary features.
1. Loan Term
Like many other financing services, the loan tenor for a home construction loan is quite elaborate. It can be up to 20 years maximum which gives you enough time to repay your loan in full. Moreover, the extreme tenor also makes sure that you are able to deal with large financing amounts in a more systematic way without straining on your budget.
2. Loan Amount
The next thing that you must know while considering home construction loan is the actual amount that you can borrow. Certain financing institutes allow you to apply for up to 90% of the construction value. This means you will be able to borrow a substantial amount of funds to get your house constructed. To know more about this, you can
use a loan eligibility calculator. It will allow you to identify the amount that you can apply for.
3. Charges and Fee
The first expense related to a home construction loan is regarding its interest rate. But what you will be surprised to know is that construction loan interest rates are quite nominal and affordable. It is usually from 8.8% onwards, and goes up as per your financial profiles. What’s more, private organizations may have a higher rate of interest on home construction loans.
4. Modes of Payments
Whenever you borrow a loan, you have to pay monthly EMIs. In the case of house construction loans, there are two available modes of repayment. These are Electronic Clearing Services as well as Post Dated Cheques. Hence, a borrower can choose their preferred mode of repayment while borrowing a house construction loan. You can even use an EMI calculator to know exactly how much you would be spending each month.
5. Tax Benefits
The government of India allows you to benefit even more when it comes to house construction loans. For people who are borrowing such a loan for the first time, there are certain tax benefits that they can receive. All you need to do for this is claim deductions while filing income tax returns. Moreover, the tax benefits can be claimed on both the principal as well as the interest amount.
The last point is regarding the eligibility of house construction loans. Anyone who is above the age of 23 years can apply for such a financing service easily. However, you need to remember that you cannot be more than 62 years of age during the loan maturity. This financing service can be borrowed by both self-employed as well as salaried individuals.