Finding finance for home construction is more difficult than borrowing a home loan. Regardless to your credit history, monthly income and other important factors, availing a home construction loan is not easy and simple. If you have a bad credit history or low credit score in that case arranging a home loan becomes more difficult. It reduces your options and chances of getting loan from major banks on your terms. Most of the banks and even financing companies ask for a minimum eligibility criteria before lending you a loan. Here are some options from where you can borrow a home construction loan to build your home.
Builder Finance: There are many small and big brand builders who will finance the construction for you. These builders construct your home and ask you to provide a floor or two from your total construction. They will not charge any money for the construction work, besides, they will ask you to give them a share from your total constructed area in from of one floor or more. For instance, if the builder will construct your property without taking any money, moreover he is responsible for each and everything regarding the construction and you are not paying a single penny for that. In that case, instead of charging you money it will ask you to give them a share of your total construction in form a floor or so to the builder.
Private lenders: Private lenders are individuals or small companies in the business of lending loans for construction of home. These private lenders do not pay much attention to your credit scores or credit history or any past financial problems. But, the one thing you have to show is your credit worthiness to the lender. You need to convince the lender that you can repay the loan. You need to keep this in mind that these private lenders charge you higher interest rates as compare to Public Sector Banks and Private Sector Banks. This higher rate of interest will increase your loan burden and at the same time increase your monthly EMI as well. This type of loan might last longer than the other loan you borrow from a bank.
Small Banks: There are various small banks which provide home construction loan to customers if you need construction loan. They are more flexible with terms and conditions and in decision making process. If you can convince them about your repayment capacity and credit worthiness, these small private banks can provide you home construction loan. The small bank lender might offer you a rate which you might get from a bigger lender. As these banks are more flexible, so you might get loan disbursed easily and on faster pace. If you negotiate well with the banks there are chances that you will get a loan on better terms and for a longer period.
Financing companies: You can borrow a home construction loan from these financing companies. There are various small and big financing companies which can provide you home construction loan. These companies can lend you a loan on more flexible terms and conditions. There are chances that these companies can provide you loan on a higher rate of interest as compared to private and public banks. However, you can negotiate for loan conditions and rate of interest with these financing companies to get a better deal.
Real-estate companies: This is another option that you can try to avail loan for home construction if a bank rejects your loan application. You can get a construction loan from these real-estate companies who can provide you a construction loan. There are companies which will provide you loan, but in return they ask you to get your home constructed from them only or they will ask for such other conditions such as give them a construction fee. So, before going to them and availing a loan ask for all terms and conditions related to the loan.