Loans for Construction
Building a home for many, is a long term goal and is an expensive affair. In such instances a personal loan won't cut it. Home construction loans as such have become a specialized product. Higher loan amounts, longer repayment tenures and lower interest rates are hallmark features of these loans.
Construction loans are provided both for individual consumers looking to build their dream home as well as to builders looking to construct projects for sale. Below are examples of both types of construction loans and their features.\
HDFC Construction Loans
- This loan offers financial solutions for both individual consumers as well as builders. Based on the type of loan availed, the repayment tenure varies. For loans availed under telescopic repayment option, the maximum loan tenure can go up to 30 years whereas other home loan options provide a maximum loan tenure of 20 years.
- Based on the loan amount availed, the maximum funding of the project varies. For loan amounts of up to Rs 20 Lakh, the loan would provide a maximum funding of 90% of the project cost, for loan amounts of Rs 30 Lakh to Rs 75 Lakh, the loan would provide a maximum funding of 80% of the project cost and loan amounts exceeding Rs 75 lakh, the maximum funding is 75% of the project cost.
- The home loans offered under HDFC construction loans come in two main variants. One is an adjustable rate home loan where the rate of the loan is linked to HDFC's retail prime lending rate. In this type of loan, the EMI changes in the direction of RPLR. Any increase or decrease in the RPLR will result in an increase or decrease of the EMI amount. The other variant is a Trufixed home loan rate wherein the initial 2 or 3 years of the loan will have a fixed rate of interest following which the rate will automatically convert into an adjustable rate for the remainder of the tenure.
- The construction loans also come in a wide variety of repayment options such as accelerated repayment, telescopic repayment, step up repayment facility, and flexible loan instalments plan.
- The loan has a processing fee of 1.25% of the loan amount and a minimum fee of Rs 3,000.
Aditya Birla Finance Construction Loans
- This loan specifically caters to real estate builders and developers. The loan offers builders the finances to meet project building costs against the returns from the project sales. The loans under this plan have a maximum tenure of up to 60 years.
- The loans require collateral. Collateral can be provided in the form of hypothecation of the project receivables or through the mortgage of the property.
- Loan amounts can go up to Rs 100 crore but loan amounts offered at the time of availing the loan will depend on evaluation of the construction cost. The loans can be applied for by salaried or self-employed professionals, sole proprietorships, unlisted companies, and even partnerships.
- The eligibility for the loan is based on the cash flow of the borrower. Loans can be availed for residential or commercial properties. Loans for residential properties will cover 70% of the cost whereas loans for commercial properties will cover 65% of the cost of the project.
Bajaj Finserv Home Construction Loans
- This loan from Bajaj Finserv allows borrowers to construct buildings on empty plots of land and based on the level of construction, borrowers can place requests for loans which will be disbursed accordingly. The interest is charged only on the money utilized and not on the entire credit amount.
- The loans come with value added features such as instant approvals, disbursals within 72 working hours, and low interest rates.
- The loan has a processing fee of 0.9% of the loan amount availed and levies a penalty of Rs 1,000 for every EMI bounce.
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