Home Loan

Complete Guide On How To Choose The Best Home Renovation And Construction Loan In India


A home is much more than just a place where you sleep. A home is where you are peaceful. It signifies your accomplishments. Everyone wants to live in a gorgeous house. Beauty and comfort are as important as location and building quality. The quality and ambience of your house make an important first impression on your visitors. Make your home a reflection of your personality.

You no longer need to wait until you have saved enough money to modify your property to your specifications. Instead, you can apply for a house renovation loan.

You may utilise a house renovation loan to repair, or renovate your home. The major perk of a home repair loan is that it allows you to modernise your existing house and create a more inviting living era that is suited to personal tastes and styles. These loans are analogous to mortgages. A home loan enables you to buy a home, but a house construction loan allows you to renovate your present home.

What is a Home Construction  Loan?

A construction loan is a type of home loan. The bank pays out the money in phases as the job unfolds. To qualify for a home construction loan, you must present the lender with a precise construction timeline, building plan, and a realistic construction budget.

After loan approval, the loan amount will be paid in phases based on the demand of each building stage. The lender would assess the site during the building or request a third-party engineer to come and inspect it.

Features & Perks of a Construction Loan

A home construction loan may benefit any person who wishes to build a house on their plot or an extra floor in their home.

  • Lengthy service:

A house building loan is offered for a long time, spanning 5 to 30 years. This implies that the borrower’s EMI load is low and the loan is cheap.

  • Tax savings:

Under Sections 80C and 24B, lines of credit, like house loans, are eligible for a tax credit on the principal and interest paid. Sections provide a tax credit of up to Rs. 2 lakh on the interest rate and Rs. 1.50 lakh on the principal. Section 80 EE permits first-time home buyers to receive an extra tax benefit of up to Rs. 50,000.

  • Loan refinancing:

You may also get a top-up loan on your current house loan. Banks examine your repayment history to assess if you qualify for a new loan to enhance your current loan. In rare cases, banks may charge processing fees for issuing a home loan top-up.

  • Loan amount:

Your income and payment criteria affect the amount of a home renovation loan you may get. Construction loans of up to 90% of the mortgage are available. To increase your eligible loan amount, you need to add a co-applicant.

What Are The Various Types of Construction Loans?

A debtor may choose one of 3 groups:

  1. Self-Construction Loan

If you have bought or have a plot in your name and need funds to build a house, you may apply for self-construction credit.

  1. Plot + Construction Loan (P+C loan)

If you do not yet have a plot and need money to buy it and build a house, a Plot + Construction loan is the ideal option. Remember that if you simply need money to buy a plot and not build a house, you must apply for a loan over property or a personal loan.

  1. Home Extension loan 

You may get a home extension loan if you need money to construct an extra floor or add a new space to your house. Similarly, a home repair loan may be obtained if you want to carry out major home repairs, repaint your house, or simply give your house a new look.

How to Select the Finest Home Improvement and Construction Loan in India

  • Need

The first step is to choose how you will spend the loan fund. Make a list of all the activities and purchases you want to make for your home. This will help you plan your purchases properly.

  • Eligibility

After you’ve created a budget for yourself, you must look into the loan amounts open to you. You may also acquire proper interest rates based on your credit score.

  • Options for repayment

Select the payment plan and amount that best suits your needs and ability. You should choose an option that will not drain your bank account in the long term.

  • Rates of interest

Apart from your credit score, your loan size and term also influence your interest rate. You may choose between a fixed and variable rate based on your ability to pay back.

  • Fee

Check the processing fee for the loan being asked on top of the rates. Fees vary based on the pay plan. A huge charge might vastly raise the number of paybacks.

Criteria to Get a Construction Loan

The eligibility rules for home construction loans are similar to those set for traditional home loans. The following are some of the main criteria rules for loan applicants seeking home building loans:

  • Availability:

Home construction loans are often available both to resident & non-resident Indians (NRIs). A home building loan is available to both paid and self-employed persons.

  • Age: 

Banks and house financing companies often accept home construction loan forms from people aged 18 years and over. They demand that borrowers completely pay back their loans by the time they turn 70.

  • Duration:

Users of home renovation loans may strengthen their eligibility for a construction loan by adding earning family members as co-borrower(s) or opting for a longer loan duration.

  • Credit Score: 

Loans with credit scores of 750 or above have a better chance of getting home construction loans. Yet, certain banks and house financing companies may offer lower rates for house loans to users with better credit.

Papers Needed for a Construction Loan

The paperwork procedure for construction loans is identical to that of conventional home loans. The following are the primary papers needed to apply for a home construction loan:

  • Identity proof
  • Address proof
  • Proof of age
  • Proof of income
  • Papers related to real estate
  • Average build cost quote
  • Completed form


Remodelling your home may enhance its look, lift your emotions, and provide you with the satisfaction of proudly showing your home to family and friends. Access to easy construction loans helps you financially. The tax benefits that come with this loan enrich its features. 

To learn more about home renovation loans, visit Piramal Finance for related blogs and explore their products and services.