Every person in India wants to buy or build a house for himself. That is why our homes in India are called ‘dream houses’. In the last few years, there has been an increase in the tendency of salaried people to take home loans in the country. Home buyers can easily get home loans in multi-storey apartments. But people are always a little apprehensive about whether they will get a home loan to build a house on their already lying residential plot or buy a plot and build a house.
Balwant Jain, tax and investment expert explains, “The process of building a house with your own plot is a bit different, but your eligibility, etc., remains the same as if you had bought a flat in an apartment. Actually, eligibility is determined on the basis of your income.
However, there are very few lenders who offer loans for self-construction. Leading lenders like HDFC, ICICI Bank give loans for this type of construction but not every bank gives.
Know what is the process
If you are taking a plot or building a house on an already existing plot, then you have to enter your margin (20 percent or 25 percent) before the bank will put the money. After you put the money, the banks put the money. The bank does not give the balance all at once but puts in money as the construction progresses. For this you need an engineer or architect’s certificate. Along with this, you have to send a photo of the construction status to the bank for further installments.
The bank can send its valuer to verify this thing. Valuers see whether the certificate given by the engineer or architect is correct or not.
Loan can also be given for land
Jain said that in many cases the cost of land is more than the cost of construction. In such a situation, the lender can also give a loan for the land provided you are ready to start construction within a reasonable time.
At the same time, if you have already bought the land, then the bank considers the amount given for it as margin money. But the bank will not under any circumstances fund more than the construction cost.
Rate of interest
According to Jain, generally the home loan rate should remain the same for this as well. But due to the high risk of over invoicing in this, banks can sometimes charge more interest. However, this is not necessary.
These documents are needed
If you need a loan to build a house on the plot, then you need documents related to income as well as land papers and a map prepared by an engineer or architect and an estimate of the expenses.
Tax exemption
You do not get tax exemption until your construction is completed and you do not get a Completion Certificate or Occupancy Certificate from the local authority. You get the benefit of tax exemption from the year of getting the certificate. If you live in that house yourself, then you get the benefit of tax exemption on 1/5th of the interest if you have paid any interest before and after the year of getting the completion certificate, but it should not be more than two lakh rupees in total. needed.
You also get the benefit of 80C exemption from the time of possession on the payment of principal. If you sell the house within three years of getting the loan, the tax exemption availed under 80C on the principal gets reversed.
