Individuals who are willing to construct their home or are planning to facelift their current residential space can safely resort to home construction loan. It offers borrowers with a high loan amount disbursed in multiple frequencies to meet construction costs. This is where a home loan is different from a home construction loan. With a home purchase loan, the funds are directly disbursed to the seller.
On the other hand, home construction loan lays out credit as per the advancement of the building and helps the borrower manage his/her expenses accordingly. Ideally, before availing such loans, individuals should keep in mind few factors that will help them make a wise financial decision.
Factors that borrowers need to know before applying for a home construction loan
- The loan amount will be credited to the account of the borrower in installments according to the progress of the construction. The number of installments offered varies from lender to lender.
- The credit extended by your financial institution cannot be used for any other purpose.
- Borrowers, before opting for a home loan, should consider the aspect of flexible repayment options. Since longer tenor means costlier loan, individuals can opt for part-prepayment or foreclosure of their home construction loan account.
Applicants must refer to the terms and conditional along with eligibility criteria and documents required before availing a home construction loan.
Also Read: Ways to Get a Construction Loan With Ease
