Home Loan on Small Constructed property on plot



I wanted to buy a property consisting of 3000sqft plot on which 2 small rooms are built as a single unit of area approx 500sqft(approx) & also, boundary wall is constructed with the borewell.
I wanted to know, whether I can get home loan on this property?
Please suggest.



Hi Shrikantnaidu,

In your case, you can apply for a Composite Loan also called a Plot Plus Construction loan. It’s a type of Home Loan that allows you to purchase land and then construct a house on it. Make sure the property you want to buy is a residential plot located within municipal and corporation limits.

The loan disbursement for a composite loan happens in tranches i.e. in instalments. The first tranche is disbursed for purchasing the plot and the remaining tranches are released as construction of the house progresses. Banks generally fund a maximum of 70 percent of the market value of the plot, but this can be lower depending on your eligibility.

To qualify for a composite loan, you must begin and finish constructing a house on the plot within a term period agreed upon with the bank. It is assumed that the loan is taken for a house that is self-occupied. So the minimum construction should be more than 25% of the area of the plot and should be a dwelling unit, which means a structure or the part of a structure should be used as a residence by one person who maintains a household or by two or more persons who maintain a common household.

Please read this for more information. https://blog.bankbazaar.com/all-about-a-composite-loan/

Team BB