May 17, 2016 02:42 PM
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If one decide to construct or buy a home from a builder, then all formalities for the loan are accomplished by the builder and the customer only needs to provide necessary documents. However, if one decide to construct the house of his or her own and needs to avail a home loan, then it is a tedious job and many nuances are there to be dealt with by the customer himself and a few of these are listed below.
1) First of all, the plan of the home needs to be drawn from a professional civil engineer taking into consideration the area of the land site where the house is to be built.
2) Then the plan must get approved at the local city development authority which is an awful task and the customer needs to work hard for it.
3) Then the customer must sign a contract with a contractor who is supposed to do the construction work. The contractor must provide an estimate of the total construction out of which 20 to 30 percent is to be paid by the customer as advance and the rest can be availed as a home loan from a financial institution or a bank.
4) To avail the home loan, the customer needs to prepare a set of documents like identity proof(PAN card or Voter ID card or Adhar card), residence proof(telephone bill or electric bill or gas connection bill), income proof(salary certificate for salaried or IT return for self employed), house plan(approved by local development authority), copy of the contract with the contractor, original documents of the land and receipt of payment of advance.
5) After all these documents are submitted, an officer from the bank visits the land site and verifies the details as submitted.
6) Al other documents too are verified by the bank manager.
7) Then the requested amount is sanctioned if found eligible. The amount mostly depends on the income which is usually sixty times of the monthly income of the customer. The customer needs to provide the required income proof accordingly.
8) Then a contract is signed between the customer and the bank manager finalizing the rate of interest for the desired home loan to be sanctioned.
9) Before the loan is sanctioned, most banks require that the customer must have a savings account in the same branch of the bank and needs to be opened if not opened earlier.
10) After the contract is signed, 30 percent of the sanctioned amount is disbursed in the name of the contractor for construction of the foundation of the house.
11) The rest amount is disbursed phase wise as the construction proceeds. To disburse the rest amount a bank officer visits the land site to keep track of the progress of construction.
12) After the total amount is disbursed, the contractor must deliver the house within three months after which the customer starts paying the installments every month as fixed in the contract between the customer and the bank manager.
