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How To Get A Home Construction Loan

4 Mins October 14, 2019

Most people avail of a home loan when they decide to buy a house. They usually buy a resale flat, ready-to-move-in property or an under-construction flat from a developer. But there is another option - building or constructing your own home, for which, too, a loan is available.

Home loan

You may have inherited a plot of land and want to build your dream home as per your specific requirements. Or you may have purchased a plot of land outside the city and plan to build a holiday home. A Home Construction loan is just what you need. Axis Bank provides a range of options for Home Construction Loans that are designed to meet your needs.

Just remember that the process of approval and disbursement, and the documentation required for home construction loans are different from regular home loans.

Get your documentation in order

You will have to first submit documents prove your ownership of the plot of land on which you plan to construct the property. This can be a freehold land or a plot leased for a long time – say 49 or 99 years. You will also need a no-encumbrance certificate for the land. Apart from these, you will also need to submit plans for your house that have been approved by the local administration-municipality in case of an urban area or the Gram Panchayat in case of a rural area. Further, you have to submit the estimated cost of construction of the house that has been verified by an architect or a civil engineer.

The rest of the documentation in terms of proof of income and Know Your Customer (KYC) requirements are similar for both home loans and home construction loans.

[Also Read: Five advantages of a Home Loan]

Loan amount is not disbursed upfront

Like home loans for under-construction flats, the disbursement happens in instalments depending upon the stage of construction. Axis Bank finances up to 80% of the construction cost. The rest must be put up by you, the borrower. You will have to pay this upfront to get the construction started and once the bank is satisfied that work has been completed to the desired extent, it will disburse the first instalment. The rest of the disbursement happens as construction proceeds.

If you have recently purchased a plot, its cost is taken into consideration while disbursing the loan amount. If you have inherited it, the value of the plot is not taken into consideration.

Interior décor is not included

The bank’s loan for constructing your house does not apply to the interior décor of a house. The loan is only for immovable objects. That means the loan cannot be used for painting the house, furniture and fixtures.


The bank will insist on you insuring your home against floods, fire and earthquakes.

Different tax benefits

A regular home loan lets you avail tax benefits on both the interest and principal components of a loan. For a home construction loan, however, tax benefits can be claimed only on the interest paid until the construction activity is completed. The bank has to certify that the construction is complete and it has disbursed the whole loan amount before you can start claiming benefits for repayment of the principal amount.

Axis Bank offers an array of affordable and flexible home construction loans that are designed to suit the requirements of all home buyers. To explore Axis Bank’s wide range of products for the most competitive Home Loan interest rates, extended loan tenures and other benefits like EMIs waivers, click here.

Use Axis Bank’s Home Loan affordability calculator that is based on your requirements, such as tenure, loan amount and interest rates to give you an estimate of your EMI.

Disclaimer: This article has been authored by The Source, a Mumbai-based content creation and curation firm. Axis Bank does not influence views of the author in any way. Axis Bank and The Source shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.