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Features Of A Plot And Construction Composite Loan
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Many individuals wish to purchase a piece of land and construct their own dream house on it. Though financial institutions have offered a variety of house loans for their customers a plot and construction composite loan is different. This type of loan provides funds for both the purchase of the plot of land as well as the construction of the individual’s dream house. The features of a plot and construction composite loan are:
• The tenure of the Plot and Construction Composite loan is between 1 to 20 years. However, the financial institution dictates that the tenure of this type of housing loan cannot extend beyond the retirement age of 60 years.
• The plot and construction composite loan can only be used to purchase non agricultural land which is located within a municipal or local development authority limits.
• Opting for a longer tenure of 20 years reduces the repayment burden on the borrower. The reason being that a longer tenure leads to shorter EMI amounts charged. This allows the borrower to meet his EMIs each month and not default on any payment.
• All financial institutions charge a processing fee from all their housing loan applicants. In the case of a plot and construction composite loan, 1 percent is charged to salaried professionals. However, self employed professionals are charged a 1.5 % processing fee on the loan amount being applied for.
• There are two repayment options available for individuals applying for this type of a housing loan. The two options available are, Electronic clearing system and Post dated cheques.
• The plot and construction composite loan application one provides can have co-applicants as well. The individual can have another earning member of the family become a co-applicant for this housing loan. Since the co applicant’s income is attached to that of the applicant, their eligibility increases. This allows the individual to apply for a higher loan amount.
• The stamp duty charges on the documents will be required to be paid by the applicant himself.
• There are no prepayment charges if 20 percent of the principal loan amount is prepaid in a year. However, if the individual prepays more than 20 percent of the principal loan amount, a 2 percent fee is charged on the excess.
• The documentation that needs to be provided along with the plot and construction composite loan is simple. An individual just needs to provide their KYC documents, Property related documents, proof of income along with the individual’s bank statements.
This type of a housing loan is ideal for individuals who wish to design their own dream home from the ground up.
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