Steps to get a construction loan in India
A construction loan is typically a short term loan that we need to pay for the cost of building a home. It may be offered for a set term (usually around a year) to allow you the time to build your home. Availing home loans in India is such an easy task, you just need to follow the procedure and within a short-time you will have a house of your own.
To avail a construction loan in India and own your dream home, all you need to do is follow the below listed processes:
Once you have applied for a loan, the financing company will first come and check whether you can afford the repayment of the applied loan amount. They will also check, whether the requirement is authentic and trust worthy. Once this is done, there will be an affordability check done by the financing company as well based on your credit rating.
The security verification comes with two different sets of verifications –
Once you have applied for a construction loan and the bank has taken the initiative to approve your loan; the prior step that comes into consideration is the legal verification. This is done by a nominated lawyer of the bank. The lawyer will check whether your property documents are authentic and reliable or not. The main objective of doing this is in case you default your payments for long and the bank wants to auction your property for loan recovery; at that time it should not face any legal problems.
List of documents required for legal verification for a home construction loan:
Once you have approached the financing company for a home construction loan, the bank will first verify the authenticity of your request. This verification is called as technical verification. The agency will cross verify your property valuation. Technical verification is very crucial for banks before loans sanction. Your property will be kept as a mortgage by the bank. Till you pay back the entire amount allotted to you in a certain period of time, the bank can do anything with your property. In case you have multiple repayment defaults, the bank can auction the property and recover the cost. This is a reason why property valuations check is done very judiciously by the banks.
The techno-legal verification done by the bank ensures if your mortgaged property provides sufficient security to the bank. Once the bank is fully satisfied they will take the final step of disbursement.
Loan disbursement can only take place once the legal and technical verification is completed. It is generally done in the form of a cheque. This cheque is signed by the home construction loan operations manager of the bank and then handed over to you after the completion of all the formalities.