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Home Construction Loan

Construction Loan Interest Rates

Last Updated 14th Apr 2021

BankInterest RateProcessing Fee
SBI 6.95% Min ₹ 10,000
HDFC 6.70% 0.50%, Min ₹ 3,000, Max ₹ 10,000
Citibank 6.65% NIL
Bank of Baroda 6.75% Min ₹ 7,500
ICICI Bank 6.70% 0.25%, Max ₹ 5,000
Axis Bank 6.75% 0.20% , Min ₹ 2,500, Max ₹ 25,000
  • As per the current rates, Citibank offers the lowest interest rate of 6.65% along with a processing fee of NIL% Nil for a home construction loan.
  • Other top banks that offer loans at best rates for construction of a house are SBI, HDFC, Bank of Baroda, Citibank and LIC Housing Finance.
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Compare Top Banks providing Construction Loan

BankInterest Rate TenureProcessing Fee
SBI Home Loan 6.95% 30 years Min ₹ 10,000
HDFC Home Loan 6.70% 30 years 0.50%, Min ₹ 3,000, Max ₹ 10,000
Citibank Home Loan 6.65% 25 years NIL
Bank of Baroda 6.75% 30 years Min ₹ 7,500
ICICI Bank 6.70% 30 years 0.25%, Max ₹ 5,000
Axis Bank 6.75% 30 years 0.20% , Min ₹ 2,500, Max ₹ 25,000
PNB Housing Finance 7.35% 30 years 0.50%, Min ₹ 10,000
LIC Housing Finance 6.90% 30 years Min
Bajaj Home Finance 6.85% 20 years 0.35%
Bajaj Finserv 6.85% 20 years 0.35%
Sundaram Home Finance 6.90% 20 years Max ₹ 3,000
Kotak Bank 6.65% 20 years Max ₹ 10,000
Yes Bank 8.95% 25 years 1.00%, Max ₹ 15,000
Syndicate Bank 6.90% 30 years 0.13% , Min ₹ 500, Max ₹ 5,000
IDFC First Bank 8.50% 30 years Min ₹ 5,000, Max ₹ 5,000
Edelweiss 10.50% 25 years 0.25%
DBS Bank 7.30% 20 years Max ₹ 10,000
Aavas Financiers 8.00% 30 years 1.00%
Canara Bank 6.90% 30 years 0.50% , Min ₹ 1,500, Max ₹ 10,000
IIFL 8.45% 30 years 1.25%
Indiabulls 9.25% 25 years Min ₹ 7,500, Max ₹ 10,000
Union Bank of India 8.25% 30 years 0.50% , Max ₹ 15,000
South Indian Bank 8.05% 30 years 1.00% , Max ₹ 10,000
Punjab and Sind Bank 8.05% 30 years 0.25% , Min ₹ 1,000, Max ₹ 15,000
Lakshmi Vilas Bank 9.70% 20 years 0.40% , Min ₹ 10,000, Max ₹ 20,000
Karnataka Bank 8.55% 30 years 0.25% , Min ₹ 250
Indian Bank 7.55% 20 years 0.23% , Max ₹ 20,381
GIC Housing Finance 10.25% 20 years Min ₹ 2,500
Dhan Laxmi Bank 7.40% 20 years 1.00% , Min ₹ 10,000
Corporation Bank 6.80% 30 years 0.50% , Max ₹ 50,000
Bank of Maharashtra 7.00% 30 years NIL
Tata Capital 6.90% 30 years 0.50%
Andhra Bank 6.80% 30 years 0.50% , Max ₹ 10,000
LT Housing Finance 7.70% 30 years 2.00%, Min ₹ 4,999
Standard Chartered Bank 7.99% 20 years 1.00%, Min ₹ 5,000, Max ₹ 10,000
UCO Bank 6.90% 30 years 0.50% , Min ₹ 1,500, Max ₹ 15,000
PNB 7.15% 30 years 0.35% , Min ₹ 2,500, Max ₹ 15,000
Reliance Capital 10.00% 30 years 1.00%, Min ₹ 3,000, Max ₹ 6,500
OBC 6.95% 25 years 0.50% , Max ₹ 20,000
Jammu And Kashmir Bank 7.20% 15 years 0.25% , Min ₹ 500, Max ₹ 10,000
IDBI Bank 7.40% 30 years 0.50% , Min ₹ 2,500
Federal Bank 7.65% 30 years 0.50% , Min ₹ 3,000, Max ₹ 7,500
Tata Capital Home Finance 6.90% 30 years 0.50%
DCB Bank 10.24% 20 years 2.00%, Min ₹ 5,000
Aadhar Housing Finance 11.00% 30 years Min ₹ 3,500
Central Bank of India 7.30% 30 years 0.50% , Max ₹ 20,000
Piramal Housing Finance 9.00% 30 years 0.10%
Bank of India 6.95% 30 years 0.25% , Min ₹ 1,500, Max ₹ 20,000
Allahabad Bank 8.25% 20 years 0.40% , Max ₹ 50,000
United Bank of India 6.95% 30 years 0.59% , Min ₹ 1,180, Max ₹ 11,800
RBL Bank 10.45% 25 years Min ₹ 5,000, Max ₹ 15,000
Karur Vysya Bank 7.45% 25 years Min ₹ 5,000
Indian Overseas Bank 7.05% 30 years 0.53% , Min ₹ 8,900, Max ₹ 13,350
HSBC Bank 6.74% 25 years 1.00% , Max ₹ 10,000

About Home Construction Loan

A home construction loan is a loan taken against the mortgage of the property on which you plan to carry new construction or renovation. For instance, if you plan to expand your house area and build one more floor on your existing property; then you can finance the construction of the house by taking a home construction loan

Here are some of the major banks which provide home construction loans in India:

  • State Bank of India: SBI Bank is one of the leading public sector banks in India for home loan. SBI also provides home construction loans at a low-interest rate of 6.65% for a tenure of 30 years. It does not charge any prepayment fees. SBI also provides an overdraft facility on home construction loan depending on your income eligibility and loan repayment capacity.
  • PNB Housing Finance: You can get a construction loan from PNB Housing finance at 7.35% for a tenure of 30 years. PNB Housing Finance charges a processing fee of 1.00% on a home building loan. The loan provided by PNB is available for both residents and non-resident Indians. Also, there are no charges or penalty on prepayment of home construction loans from PNB Housing Finance.
  • HDFC: An Indian resident and non-resident Indian above the age of 24 years can apply for a construction loan for a tenure upto 30 years from HDFC. Interest rates for HDFC home construction loans start at 6.70% and it charges a processing fee of %. HDFC offers a special discount on rates if the loan is taken by a female borrower solely or as a co-applicant.
  • ICICI Bank: You can get home construction loans from ICICI Bank at an interest rate starting 6.70% for a tenure of 30 years. In case of a floating rate of interest on home loans, there are nil prepayment charges. You can also get overdraft facility and top-up loans on a home construction loan with ICICI Bank.
  • Citibank: Citibank is one of the popular foreign banks for retail finance in India. You can get a low-interest rate of 6.65% for home construction loans from Citibank. You can also opt for an overdraft facility to save interest and balance transfer to get low rate loans. The processing fee charged by Citibank on a home construction loan is NIL.

House Building Loan - Features & Benefits

A home building loan has the following benefits for any borrower who wish to construct a house on his plot or an additional floor on his house:

  • Longer tenures: The house building loan is available for long tenures and can range between 5 to 30 years which means that the home loan EMI burden on the borrower is low and the loan is affordable.
  • Tax benefit: Like Home Loan, one can claim tax benefit on the principal amount and interest paid on the construction loans under Sec 80C and Sec 24B. Under the Sections, one can claim tax benefit up to ₹ 2 Lakh on the interest and ₹ 1.50 Lakh on the principal amount. The first time buyers can also claim additional tax benefit up to ₹ 50,000 under Sec 80 EE.
  • Balance transfer facility: Most of the banks also provide balance transfer facilities on home construction loans as they do on home loans. If a borrower finds that the current rate of interest he is paying on loan is higher than the market, he can opt to transfer the outstanding balance of loans to other banks by paying balance transfer processing fees of up to 1%.
  • Home loan top up: You can also opt to take top-up loan as home construction loan on your existing home loan. Banks primarily check your past track record of repaying the home loan to check our eligibility to get additional loan for construction as top up on your running loan. Banks may also charge processing fees for providing home loan top-up in some cases.
  • Loan amount: The amount of loan amount you can get for the home construction loan depends on your income and repayment eligibility. You can get construction loans up to 90% of the value of the property. The loan amount can range between ₹ 1,00,000 to ₹ 15,00,00,000. To increase your eligibility of loan amount, you must add a co-applicant for the loan.

Construction Loan Eligibility Criteria

To avail the construction loan, you need to have a detailed construction plan about the house, including the materials to be used in the construction of the house. You can get a construction loan if you fulfill the following eligibility criteria:

  • Age: The age limit to get a home construction loan is between 18 years to 70 years. However, some banks give loans for construction upto a maximum age of 65 years.
  • Profession: Both self-employed and salaried individuals can avail a construction loan. The interest rates are lower for salaried applicants.
  • Credit Score: A credit score of 750 or above is considered an ideal score for availing a construction loan. However, some banks give home loans at a credit score of 650 and above.
  • Nationality: Any Indian resident or non-resident Indian can apply for home construction loans.
  • Income: The fixed income to obligation ratio cannot exceed 65% of the monthly income. The minimum income required to apply for a home construction loan is ₹ 25,000.

House Construction Loan Documents

To get a home construction loan, you must get a pre-approval for the construction plan of property and submit the following documents:

  • Identity proof: Aadhaar Card, Valid Passport, Voter ID Card, Valid Driving License and PAN Card.
  • Address proof: Utility bills, Aadhaar Card, Valid Passport, Voter ID Card.
  • Income proof: Income Tax Returns, latest Form 16, Salary account statements for the last 6 months, Salary slips for the previous 3 months. In the case of self-employed individuals, the income tax returns, salary accounts of the previous 6 months and salary slips for the 3 months of the business entity also need to be submitted.
  • Documents related to property: Encumbrance property, title deeds of the property, plan sanctioned by local authorities and estimated construction cost quotation.

FAQs

How much loan can I get for home construction?

You can apply for a home construction loan upto a loan amount of 90% of property’s value. However, the loan amount for construction loan ranges upto ₹ 15,00,00,000. You can also add a co-applicant to increase your loan eligibility.

What is required for a home construction loan?

To avail a home construction loan, you will need to submit the essential property documents such as encumbrance certificate, title deeds of the property, and estimated construction cost quotation so that the bank can evaluate that the property has a clean title and technical specifications. You also need to provide other documents for identity, address and income proof. Besides, having the essential documents you need to fulfill the basic eligibility criteria of the banks to grant a loan related to age, income and profession etc.

Where can I get a home construction loan?

Major Banks such as SBI, Axis Bank, PNB and Citibank provide home construction loans. You can decide about the best bank for a home construction loan based on the interest rates, processing fees, lending process and documents required for availing the loan.

Which bank is the best for construction loans?

HDFC can be considered as the best bank for construction loans as it provides loans at the lowest interest rate of 6.65%.

What are the current construction loan rates?

As on 14 Apr 2021, construction loan rates start from 6.65% rate of interest and range till 12.50% rate of interest.


Home Loan News - Apr 2021
  • 2021-04-13 : Bank credit rise 5.56%; deposits 11.4% in FY21
    RBI reported that the Bank credit which includes retail loans like home, personal, business, car, two-wheeler, education and doctor loan along with business and mudra loans grew 5.56% to Rs 109.51 lakh crore in the financial year ending March 31, 2021. Further, the deposits include fixed and recurring deposits and rose 11.4% to Rs 151.13 lakh crore.
  • 2021-04-13 : Housing finance companies likely to witness a growth of 8-10% in FY22
    ICRA reported that with the increase in housing loan demand in the last quarter the HFCs are likely to witness a growth rate of 6%-8% during the year and 8%-10% in FY2021-22.
  • 2021-04-13 : Kotak Mahindra Bank kept its home loan rate unchanged at 6.65%
    Even as some of the banks have hiked their home loan interest rate, Kotak Mahindra Bank has kept the home loan rate unchanged at 6.65%. The interest rate is applicable for both the home loan and balance transfer product. The bank is aiming to increase its share in the housing loan market.
  • 2021-04-13 : Bandhan Bank’s collection efficiency ratio at 96% in Q4
    Bandhan Bank reported an overall collection efficiency of 96% for the quarter ending March 2021. Total advances which include retail loans like home, personal, business, car, two-wheeler education and doctor loan along with business and mudra loans grew by 21% at ₹87,054 crores. Deposits which includes fixed and recurring deposits grew by 37% at ₹77,972 crores. Further, CASA deposits increased by 61 per cent at ₹33,827 crores.
  • 2021-04-07 : IIFL Home Finance signs co-lending agreement with Standard Chartered Bank
    IIFL Home Finance and Standard Chartered Bank have entered into a co-lending arrangement for extending credit. Under this agreement, IIFL Home Finance and the Standard Chartered Bank will co-originate these loans and the IIFL Home Finance will service the customers through the entire loan life-cycle including sourcing, documentation, collection and loan servicing.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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