Information on construction loans
Now, Banks provide loans for various purposes and Loan is con sidered to be an important service and revenue generation method for all the Banks. Banks compete amon g themselves to attract customers and more business for providing loans with competitive interest rates and Loan Amount Con struction Loan is on e of the major loans, most of the banks provide
Con struction Loan is the Loan provided for funding the con struction activity of any commercial or residential projects. The loan is basically for funding the cost of Material and labour of the con struction process. The banks have separate rules for sanction ing loan towards con struction of commercial and residential projects. The commercial con struction project involves large capital and the con struction activity of commercial projects is basically handled by Business organization s.
The residential con struction project cost will be lower compared to the commercial projects and the project will be handled by individuals most of the time. Banks maintain different interest rates and qualification criteria for applying the Loan and the loansanction ing procedure itself is different for Commercial and Residential con struction projects
Con struction Loan Process:
Banks follow a strict procedure for any Loan and for the con struction Loan also, Banks adopt a standard procedure. The first activity in the Con struction loansanction ing is the approval of the residential or the commercial project plan. The customer has to submit a detailed plan of the con struction with all the cost details
on ce the bank receives the plan, the bank will study the same and come out with the recommendation, whether loan can be provided for such a con struction. The bank also ascertains the credit worthiness of the customer by checking various person al and official documents to decide upon the Loan amount and the Loan duration.
After the bank gets con vinced about the credit worthiness of the customer, the bank will person ally discuss all the issues relating to the loan regarding Loan amount, Loan duration, the interest rates and the Mon thly Installments. on ce the customer is aware of the procedure and the various costs involved, the Banks issues a statement that the loan is sanction ed. The Bank also releases the loan amount based on the development of the con struction activity at the different stages of con struction of the Building.
Major con sideration s:
The customer has to closely compare the various loanschemes provided by various banks so that he makes an informed decision in selecting the Bank while going for the Loan. The customer should also understand the interest rates, the total cost of the loan, loan duration, any penalties, the processing charges, mon thly installments etc. After getting con vinced about all these aspects, the customer can go for a Loan for the con struction purpose.
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