Rather than a mortgage, you’ll start out with a construction loan for building the house; while you can use a separate loan to buy the land, you can also combine the construction and land purchase into a single deal.
Accordingly, how much home loan can I get on 40000 salary?
How much home loan can I get on my salary?
|Net Monthly income
|Home Loan Amount
Keeping this in view, how much deposit do you need for construction loan?
For construction loans, you’ll need to have at least a 20% deposit of the property’s projected value.
Is it cheaper to buy a lot and build?
Based on the average home sale, it’s definitely cheaper to buy your home rather than build it. On the other hand, the price per square foot is fairly comparable – it’s just that most people opting for new homes want larger homes.
Qualifying for a construction loan
It’s harder to get approved for a construction loan than for a typical purchase mortgage, Moralez and Thomas say. That’s because the bank is taking extra risk during the building phase, since there isn’t an asset to secure the mortgage. Typical down payments are around 20%.
It may be possible to borrow 100% of the property’s value if you have a guarantor. However, the larger the land, the harder it can be to get a loan, especially if the land is over 2.2 hectares.
You may be able to extend the loan terms if you qualify for a construction-to-permanent loan. If you are intending to purchase raw land, you should expect the loan terms to be even more restricted, with terms be limited to under 10 years.
A land and construction loan is a specially designed product offering progressive payments in line with different stages of construction. Interest is generally charged only on the amount drawn down, which means you are only paying interest on the part of the loan you are actually using.
Generally, most of the banks offer loan for those who want to purchase a plot and construct a home on it. This is easily available for most of the salaried and self-employed people. However, the maximum loan amount varies from bank to bank. You can borrow the loan based on your monthly income.
Plot Loan Interest Rate 2021
|Interest Rate (p.a.)
|HDFC Plot Loans
|7.05% – 7.95%
|ICICI Bank Land Loan
|7.00% – 7.80%
|Federal Bank Plot Loan
|7.65% – 7.80%
|Shriram Housing Finance