The Indian real estate sector is likely to contribute a substantial 13% to the country’s GDP by 2025. This statistic alone is indicative of the high demand for property, making now a good time for you to consider making an investment. Whether you are interested in buying a home for your family to stay in or simply want to buy property as an investment, you can choose from two loan options to finance your purchase: a home loanand a home construction loan.
While a home loan is intended at helping you purchase a home of your choice, ahome construction loan is financing option that you should pursue in case you plan to build a home on a piece of land.
Here are the factors that will help you understand how the two loans differ, and whether you should choose a home construction loan or a home loan.
Based on your requirement
The purpose of both loans is different. While one helps you buy the home itself, the other helps you construct a home as per your specifications. For the first, choosing ahome loanis ideal. However, for the latter, a home construction loanserves as a better option.
Based on preliminary checks that lenders conduct
Both loans are granted after the lender has done a preliminary assessment. If you take a home construction loan, it involves the lenderappraising the plot of the land, cost of construction, as well as the resultant value of your home. On the other hand, a home loan involves the assessment of the home that you are going to purchase. The value of the apartment, age, location and growth prospects all have a bearing on the lender’s decision.
Based on eligibility and document requirements
While the eligibility criteria for both loans is almost the same, home construction loans require you to submit an additional document: a detailed construction plan (including materials to be used). This helps the lender determine the true cost of the project and sanction funds accordingly.
Bajaj Finserv offers a Home Loan as well as a Home Construction Loan so that you can choose the option that best suits your needs. Apart from a low rate of interest, you can also enjoy a flexible tenor and favourable prepayment and foreclosure terms on both loans.
Based on disbursal timeline
A home loan is disbursed to you instantly once your documents are approved. This could be a span of few days or just a few hours depending on the lender you opt for. However, when you choose a home construction loan, the funds are released in parts, depending on the phase of construction. For example, in the initial stages you will require a substantial amount of funds to get the ball rolling and so, the lender will sanction more at the beginning. This amount will get lower as you progress towards completion of construction.
Based on these differences,you can choose between ahome loan and ahome construction loan. Should you choose a home loan, be sure to check your eligibility using the home loan eligibility calculator. Also, before you apply, use a home loan EMI calculator to see if the loan is affordable for you.
Bajaj Finserv brings you pre-approved offers for personal loans, home loan, business loans and a host of other financial products. Not only does this simplify the process of availing financing, but also helps you save on time. All you have to do is share a few basic details and check out your pre-approved offer
Need instant financing? Think it. Done with Bajaj Finserv.
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