We look at certain tips for obtaining a loan for constructing a house on a self-owned plot of land.
Loan amount: If the land is free from loans, even 100% construction funding can be available. The banks compute the loan amount as per the market value of the plot. They accept the value of the land as self-contribution for availing of the loans.
Ownership status of the land: The ownership - the title holder(s) of the plot is the most significant issue. The land could have been purchased from an independent land owner/developer. It could have been inherited from the present owner's ancestors.
Basic facilities/amenities available: Gated communities are preferred by lenders. If the plot is within a gated community with standard facilities already present such as water and electricity connection, roads laid then it is simpler to obtain a loan.
Statutory requirements: The plot should possess all necessary clearances from the local town-planning authority as well as government. It should not be in agricultural or commercial or green zone. If it does fall into the mentioned categories, funding is not possible as per conventional criteria for home loans.
Necessary documents: It is mandatory to have a sanctioned plan from the concerned town-planning authority or the corporation of the city. Tax dues on the land should have been cleared completely.
Tranche disbursement: Usually the loan disbursement is in tranches. For instance if 50% of the construction is completed, 50% of the loan funds will be released. If the funds disbursement is in advance, only on a valuation person's report that the disbursed sum has been used for construction and satisfactory progress is made will the next tranche be released.