Construction Loan
Build your dream home on your plot with stage-wise funding that matches your construction progress. Rates from 8.75% p.a. Pay interest only on funds drawn.
How Construction Loans Work Differently
Unlike a standard home loan that disburses the full amount upfront, a construction loan releases funds in 4–6 tranches tied to verified construction milestones. You pay Pre-EMI (interest only) during construction, and full EMI begins only after the final disbursement. This significantly reduces your interest burden during the build phase.
Typical Disbursement Schedule
| Stage | Construction Milestone | Typical Disbursement |
|---|---|---|
| Stage 1 | Foundation & Plinth | 25–30% of loan |
| Stage 2 | Ground Floor Slab | 20–25% |
| Stage 3 | First Floor Slab | 15–20% |
| Stage 4 | Roof / Terrace Slab | 15–20% |
| Stage 5 | Brickwork & Plastering | 10–15% |
| Stage 6 | Final Finishing | 5–10% |
* Schedule varies by lender. Banks send technical inspectors to verify each milestone before releasing the next tranche.
Eligibility Criteria
Key Advantages
Plan Your Construction Loan
Use these tools to estimate your costs and eligibility before applying.
Frequently Asked Questions
How is a construction loan different from a home loan?
A regular home loan is for purchasing a ready-to-move or under-construction property from a builder. A construction loan is for building a house on a plot you already own or are purchasing simultaneously. The key difference is disbursement — construction loans are released in stages based on construction progress, not as a lump sum.
How are construction loan funds disbursed?
Funds are disbursed in 4–6 tranches tied to construction milestones: foundation completion, plinth level, ground floor slab, first floor slab, roof completion, and finishing. The bank sends a technical inspector to verify each stage before releasing the next instalment.
Do I pay EMI on the full loan amount from day one?
No. During the construction period, you only pay Pre-EMI — which is the interest on the amount disbursed so far. Full EMI (principal + interest) begins only after the final disbursement or after the construction period ends, whichever comes earlier.
What is the maximum time allowed to complete construction?
Most banks allow 18–36 months for construction completion from the date of first disbursement. Some lenders extend to 48 months. If construction is not completed within this window, the bank may convert the loan to a regular term loan or recall it.
Can I get a construction loan on an inherited plot?
Yes, construction loans are available on inherited plots, provided the plot has a clear title, legal heir certificates are in order, and there are no disputes or encumbrances on the property. Banks may require a legal opinion from their empanelled lawyer.
Ready to build your dream home?
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