Home Loan Vs Construction Loan: Which is Better?

Every Indian family’s dream is to live in their dream home. But, as real-estate prices soar, buying a residential property out of pocket is next to impossible.

You can accomplish your dream of owning a home by getting a loan so that you can buy it. But did you know you have two options when it comes to home financing?

The first is the more common type of home loan provided by the lender bank, which is for a pre-built, existing house. The second type, called a construction loan, is a type of loan provided to the borrower for the construction of the house.

Find out about the differences between these loans and how you can determine which one is right for you.

The term home loan refers to a loan where the entire loan amount is disbursed at once, and the borrower buys an existing house and pays EMIs for 20-30 years.

Home construction loans are loans that are disbursed gradually towards the construction of a home.

Features	Home Loans	Home Construction Loans
Offered to	Completed properties/under construction properties	For individual who are planning to construct their own home
Maximum Tenure	30 years	7 to 15 years. It varies based on the lender
Tax Benefits	Available on both the interest and principal	Available only after construction is completed
Maximum Loan Value	70% to 90% of the market value of the constructed properties	50% to 70% of the total estimated cost of construction
Loan Disbursal	The sanctioned amount is paid in a single instalment	Paid in several instalments, depending on the progress of the construction

In the End

If you’re about to take the loan and aren’t sure about it, it’s advisable to seek advice from a professional. Roodland India is able to assist you.

You will be guided by specialists throughout the process, ensuring that you do not make any mistakes when purchasing your business or residential property.