Overview About Home Loan & Construction Loan

As a borrower, you may wonder, what is the difference between a construction loan and a home loan? Both offer funding for property-related expenses, but a key distinguishing factor is the sanction usage or purpose.

With a home loan, the sanction is used to buy, build or renovate a residential property. On the other hand, a construction loan is availed when a borrower needs funds to construct a building for commercial or residential purposes. However, this isn't the only difference when comparing a home loan vs a construction loan. For more information on this matter, read on.

What is the Difference Between Home Loan and Construction Loan?

Both type of loans provide significant financial assistance for property-related expenses. When it comes to a home loan and construction loan, lenders primarily distinguish borrowers based on the purpose for the loan. Apart from this distinction of purpose, there are a few other differences as well, which are as follows.

Factors Home loans Construction loans
Documents required KYC documents, property agreement and proof of income for verification Approval from the municipal corporation, plot's legal authorisation by requisite local authorities, property tax papers, and blueprint of the proposed construction from an approved architect or civil engineer
Tenor Maximum repayment period of up to 30 years Repayment tenor generally ranges between 10 and 15 years
Approval and disbursal Loan transferred directly to the borrower’s or builder’s bank account within seven working days, i.e., transferred through a single instalment Phased out disbursals (3–5 instalments) to correspond with the stage of construction

With a clear understanding of these pointers, there is no scope for confusion between home loan vs construction loan. If you are seeking to buy a property, then the Bajaj Housing Finance Limited Home Loan is your best bet. The loan comes with several features and advantages that help you borrow affordably and to comfortably meet your needs. The loan is offered at an attractive and competitive home loan interest rate with a tenor that ranges up to 20 years. This allows you to tailor repayment to your budget and ensure your interest outgo stays optimal.

For easy access to all these home loan benefits, simply apply online by filling the easy application form today.