Home construction is a costly affair in India. Some estimates suggest that building a 1000 sq ft house can cost anywhere between Rs.15 lakh to Rs.50 lakh, depending on the location and other aspects.
Thus, a construction loan for a home can assist in building a dream home with your own specifications. House construction loans are usually short-term advances, which are also secured in nature.
Home construction loans are different from regular home loans in the sense that the latter can be used either to purchase or to construct a new house. The former can strictly be used for construction purposes. House construction loans cover diverse expenditures starting from planning to execution of the property construction.
The attractive construction loan interest rates paired with transparent terms and conditions make it altogether an ideal financial solution for individuals planning to build their dream abode.
Tax benefit under house construction loans
As regulated by the Income Tax Act of 1961, borrowers can claim tax deduction up to Rs.1.5 lakh on the repayment of the principal amount once the construction of the property is complete. This has been specified under Section 80C of the Act. One condition under such tax benefits is that the house must not be sold within 5 years of its construction.
Under section 24(b), borrowers can claim tax deductions up to Rs.2.5 lakh on interest payment after the construction is complete. These tax benefits might not be applicable if a borrower has started paying home loan EMIs before the completion of the house construction.
Guide to the features and benefits of a home construction loan
When you avail a loan for building your home, you not only acquire financial assistance but also guidance from various representatives of the lender. Also, when you do not have to go through the hassles of managing cash or restraining the expenses to a tight budget, you can focus better on the project.
Given below are some of the unique features and benefits included in home construction loans-
- Substantial funds- Construction of a house requires a huge amount of funds. Especially when you have pictured your dream house and wish to build it exactly the same, you would require ample funds. With a home construction loan, you can apply for funds of up to Rs.3.5 crore. The affordability and feasibility of such loans depend on the interest rate charged by the lender. You can also look at the top tips to reduce home loan interest to make the repayment easier.
- Flexible repayment terms- The lender allows you to reduce your financial burden by providing you with the option of selecting a repayment schedule as per your convenience.
- Simple balance transfer facility- Borrowers can refinance an existing loan in a hassle-free manner with the simple balance transfer facility under home construction loans.
- Speedy approval and disbursement- Loan disbursals now happen within a short span. Loan-seekers do not have to keep waiting for months to have their application approved and receive funds. Many financial institutions approve loan requests within a few minutes and disburse the funds within 72 hours of approval. Following a few simple steps will help you get the home loan quicker.
- Exclusive top-up loan facilities- You can cover miscellaneous expenses related to home construction with top-loans. These loans can be availed on the existing housing loan without having to pay added charges or submit other documents.
- Online access to loan account- Online account management helps you stay updated about your loan details, repayment schedule, deadlines, upcoming EMIs, interest to be paid, and so on. Tools like an online EMI calculator also help borrowers estimate their upcoming monthly payments.
Housing construction loans usually have simple eligibility criteria so that maximum people can avail this fund option and build the house of their dreams. You can also make use of the home loan eligibility calculator to evaluate the number of funds you are capable to borrow.