Home Loan Vs Construction Loan: Which is Better?

Kishan Thakkar K

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.

FeaturesHome LoansHome Construction Loans
Offered toCompleted properties/under
construction properties
For individual who are planning to construct their own home
Maximum Tenure30 years7 to 15 years. It varies based on the lender
Tax BenefitsAvailable on both the interest and principalAvailable only after construction is completed
Maximum Loan Value70% to 90% of the market value of the constructed properties50% to 70% of the total estimated cost of construction
Loan DisbursalThe sanctioned amount is paid in a single instalmentPaid 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.


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