Flexible Construction Loans with Leading Banks

Construction Loans

Flexible Funding Options for Construction

Build Your Vision with Construction Loans

A Construction Loan is indeed a specialized type of financing tailored specifically for funding the construction or renovation of residential or commercial properties. Here’s a detailed overview of how construction loans work:

Why Choose MyFinCorp for Your Construction Loan?

Purpose: Construction loans are used to finance the costs associated with building a new property or renovating an existing one. These loans are typically short-term and designed to cover the expenses incurred during the construction phase.
Types of Properties: Construction loans can be used for various types of properties, including single-family homes, multi-family residential buildings, commercial properties (such as offices, retail spaces), and sometimes even for infrastructure projects.
Loan Structure:
- Disbursement: Unlike traditional loans where funds are disbursed in a lump sum, construction loans disburse funds in stages or “draws” as the construction progresses. This helps ensure that funds are used efficiently and in accordance with the construction plan.
- Interest Payments: During the construction phase, borrowers typically make interest-only payments on the amount drawn. Once construction is complete, the loan may convert into a more traditional mortgage or require full repayment of the remaining principal.
Loan Amount: The loan amount is based on the estimated cost of construction or renovation, which includes materials, labor, permits, fees, and contingency reserves. Lenders may provide up to a certain percentage (often around 80-90%) of the total project cost.
Interest Rates: Interest rates on construction loans can be higher than those for traditional mortgages due to the short-term nature and higher risk associated with construction projects. Rates may be fixed or variable depending on the lender and market conditions.
Approval Criteria: Lenders evaluate construction loans based on the borrower’s creditworthiness, income stability, project feasibility, construction plans, and the property’s value. Borrowers may need to provide detailed construction plans, timelines, and cost estimates to secure approval.
Documentation: Borrowers must provide comprehensive documentation, including construction contracts, building permits, architectural plans, contractor bids, financial statements, and personal or business financial records.
Loan Disbursement Process: Funds are typically disbursed in stages or draws based on milestones in the construction project. Each draw requires inspection and verification by the lender or a third-party inspector to ensure that the work has been completed as per the agreed-upon specifications.
Conversion or Refinancing: Once construction is complete, borrowers may convert the construction loan into a permanent mortgage loan (if it wasn’t initially structured as such) or refinance the remaining balance into a different loan product.
Risk Management: Construction loans involve inherent risks, such as construction delays, cost overruns, or changes in market conditions. Borrowers and lenders must work closely to manage these risks and ensure the project’s successful completion.

8.5%

Interest Rate

Starts from 8.5 to 12%

80%

Loan Amount Range

Up to 80% on Property value

0.5%

Fees and Charges

Start from 0.5% to 1%

For Salaried Employees

KYC: Applicant and Co-Applicant

PAN Card (Mandate)
Aadhar Card (Mandate)
Voter ID (optional)
Driving License (optional)
Passport (optional)
Latest Passport Size Photo
Employer ID card
Resident Address Proof

Income Proof Documents:

3 months Pay slips (Latest)
IT returns for the past 2 years or Form 16 or PF ( Provident Fund ) Statement
6 months Bank Statement latest where your salary is credited

For Self-employed

KYC: Applicant and Co-Applicant

PAN Card (Mandate)
Aadhar Card (Mandate)
Voter ID (optional)
Driving License (optional)
Passport (optional)
Latest Passport Size Photo

Income Proof Documents :

Income Tax Returns ( ITRs ) for the Last 3 years ( Along with Profit & Loss and Balance sheet and Computation of income)
Office or Shop Business Registration Certificate.
One year Bank Statement from personal a/c and Current Account
GST registration certificates, 1 year GST monthly returns (if applicable.)
Partnership deed in case of partnership firms (if the applicant is one of the partners).
Certificate of Incorporation in case of Limited or Pvt. Ltd Company (if the applicant is one of the Directors).

For NRI

KYC : Applicant and Co-Applicant

Valid passport and visa (attested copy)
PAN, Driving License, Aadhar Card
Address proof with the current overseas address
Documents must be attested by Overseas Notary Public or Indian Embassy/Consulate.
passport size photograph
Employer identity card

Income Proof Documents for NRI

For Salaried
- Employment contract Letter with an English translation (if it’s in another language)
- Last 6 months’ salary slips or salary certificate
- Last one Year bank statements showing salary credits
- Latest Individual Tax Return (duly acknowledged copy) except for NRIs/PIOs located in Middle East countries & Merchant Navy employees.
For Self-employed
- Business address proof
- Income proof in case of Self-employed Professionals / Businessmen.
- Last 2 years’ balance sheet and P&L accounts (audited / C.A. certified).
- Last 2 years’ Individual Tax Return except for NRIs/PIOs located in Middle East countries
- Last 12 months’ bank statements of overseas account(s) in the name of individual as well as company.
GPA ( General Power Attorney ) PAN, Aadhar Who is Staying in India

Property documents

Agreement of Sale
Mother link Document Copies of all, that can establish the chain of ownership for the past 20 years.
Building Construction Permission Plan
Encumbrance certificate for 20 years
Property tax paid receipt

A construction loan is a type of short-term loan designed to finance the costs associated with building a new property or renovating an existing one. It covers expenses such as materials, labor, permits, and other construction-related costs.

Unlike a traditional home loan, which provides a lump sum upfront, construction loans disburse funds in stages or "draws" as construction milestones are completed. Interest payments are usually made on the disbursed amount during the construction phase.

Eligibility criteria typically include factors such as a detailed construction plan, cost estimates from licensed contractors, a stable income or financial capacity to repay the loan, and collateral to secure the loan.

Funds are disbursed in stages based on the completion of predefined construction milestones. Borrowers must submit documentation site inspections to the lender to release each draw.

After construction is finished, borrowers may convert the construction loan into a traditional mortgage or arrange for long-term financing to repay the remaining balance.