What You Should Know About Composite Construction Loans, Interest Rates, Eligibility, and EMI

Building the home of your dreams is an expensive endeavour, and the majority of individuals need financial assistance to do it. Numerous home loan choices are available, provided by various banking institutions. Although the basic steps for obtaining a house loan are straightforward, you should be familiar with the types of loans available before choosing one.

You can learn more about composite loans in the sections that follow, which also compare the composite loans provided by HDFC, LIC, and SBI and describe how they differ from conventional home loans.

What do you mean by a Composite Loan?

A composite loan is for those who want to customise every aspect of their new home and have it built from the ground up. The combined loan includes funding for both the plot acquisition and the building project. The loan amount typically comes with a requirement that you contribute a specified portion of your overall financial resources to the plot and the construction costs, respectively.

Key features of Composite Loans:

You can receive tax advantages for repaying a composite loan, but you’ll need a completion certificate to substantiate that claim. since these advantages are only available once the work is finished.

The loan payment amount is deposited into your personal bank account. However, the documentation you provide beforehand will help the bank make sure you only use the funds for their intended use.

 Not the entire sum is donated up front or all at once. The first payment is for the plot, the second is for the start of construction, and the remaining money is given out in instalments over time to cover the cost of construction.

  Your composite loan agreement specifies when the construction must begin and end. There may be legal repercussions for you if you violate this condition, which typically occurs because of things like unreliable contractors.

 You will need to build something over the plot you buy if you take out a composite loan. The bank will make sure you complete the construction because it is a requirement.

In India, composite home loans are also available to non-resident Indians (NRIs). However, only a small number of banking institutions provide this service, so you must make an informed decision.

On average, a processing fee is charged for each loan application. The cost varies and is based on a number of variables. The variables might be anything from bank policy to loan size to property valuation and more.

 When deciding whether to approve composite loan applications, banks may take the property’s location into account; homes within city limits are preferred.

General Eligibility Criteria for Composite Loans:

Being an adult between the ages of 18 and 70 meets the overall eligibility requirements for a composite home loan, while the actual age varies according to the bank you use. The minimum credit score required in this instance is 750, albeit the bank you choose may have greater standards. This, however, is typically preferred.

Additionally, you must be either self-employed or employed on a salary when you apply for the loan. The required minimum income varies depending on the bank you select and the loan amount you want.

Documents required for a Composite Loan:

·       Loan application with signature and photo

·       KYC (Know Your Customer) (Know Your Customer) documents

·       ID Proof (Passport, PAN card, voter ID card, driver’s license, and ration card)

·       Proof of address (utility bill, ration card, or employer letter).

·       Documentation of Income Proof

·       Banking records

·       Wage slips

·       Income Tax Form 16 docs

·       Records pertaining to the property

·       Own proof of contribution

·       Stipulation plan

·       A letter of allocation or a selling contract

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