Building your dream house from the ground up can be a way more fulfilling experience when compared to purchasing a new one. Constructing a new home means that you will not be eligible for a mortgage loan but will have to apply for a home construction loan instead. Construction loans are unlike traditional home loans that consider property valuation but are short-term loans with higher interest rates and flexible plans based on the final project value when construction completes.
Here’s a summary of all that you need to know when it comes to new home construction loans:
Types of Home Construction Loans
The most common types of home construction loans include plot and home construction loans, extension loans, and self-construction loans.
- Plot and Home Construction Loan
Plot and Home construction loans provide for plot purchasing and construction, both under certain conditions.
- Loan for Self-Construction
A self-construction loan allows you to design your home upon your legalized plot the way you want it to be.
- Home refurbishing or extension loan
Home Construction Loans provide you with funds for adding a new floor or perhaps for renovation.
How to Get Your Loan Approved
There are multiple factors that contribute towards getting a loan approved such as having a higher credit score that reflects your previous reimbursement records, applying for loans according to eligibility, having the appropriate documents in hand, and so on.
- Apply for a loan according to eligibility
Appraise your income before applying for the loan amount as the lenders of new home construction loans approve loans after determining your repaying capacity. The total amount is divided into a certain number of EMIs which is not supposed to exceed 50% of your monthly salary.
- Keep property documents handy
To get the loan approved, keep the documents of your plan and estimated amount clean and handy. The lenders scrutinize the details of the contractor to be assured of the authenticity of your project.
Pros and Cons of Home Construction Loans
Just as everything comes with pros and cons, so do Home Construction Loans. It gives you the advantages of saving a large amount of money, paying for the interest during the construction, flexible plan as per income, repayment eligibility, and so on.
Some of the disadvantages of home construction loans include – a higher interest rate, a short-term contract, and difficulty getting your loan approved. You need to submit various documents to get your loan approved that can be time-consuming.
blakemortgage.com offers loans at comparatively low-interest and takes care of all the official work carried out in the trusted hands of a certified consultant. With years of experience and absolute honesty, they provide you with the best possible experience. Make sure to reach out to Blake Mortgage if you want to get a new home construction loan from a trusted resource.