Reconstruct Your House With The Help Of A Personal Loan

Many banks, NBFCs, and housing finance companies, nowadays give personal loans for reconstruction and renovation of a house. If you own a single-storied house, you may take a loan to construct another floor on it for personal use, or you may give it on rent, or if you own a one BHK house, you may want to add in a few more rooms. You can also reconstruct an old house and renovate it.  Personal housing loans can finance all these. A personal loan is a best fit and most flexible type of loan.

In addition to loans to purchase a new house or reconstructing an old house, the banks also give loans for repairs, renovation, extension, and alteration of the old house. Refer to this personal loan guide to learn more about how you can reconstruct your old house with the help of a personal loan.

When can you avail of a personal loan for reconstructing your house:

Eligibility criteria for home reconstruction loans are very similar to that of any other home loan. You can apply for a house renovation, improvement, or reconstruction loans either individually or jointly. All owners of a house or property for the reconstruction of which the loan is sought must be co-applicants; however, all co-applicants don’t need to be co-owners of the property too.

The criteria for the minimum age at the time of application is 24 years old or above. The repayment of loans has to be completed before attainment of the age of 60 years. Any salaried person, professional worker, or self-employed individual can apply for a personal loan for house reconstruction.

Important documents you will need while applying for reconstruction loans:

  • Duly filled and signed loan application form
  • Identity Proof (Copy of Passport/ PAN Card/Voter ID/Driving License).
  • Age Proof (Birth Certificate/Passport/PAN Card/ Driving License).
  • Address Proof (Property tax Receipt/ Aadhaar Card/ Copy of electricity bill/ Utility Bill/Voter ID/ Passport).
  • Passport size photographs
  • In the case of Salaried individuals: Form 16, past 3 months’ salary slips, Copy of Income Tax Returns (ITR ) for the last 2 financial years.
  • In case of self-employed or businessmen: ITR of last 2 years with the computation of income and expenses, Profit and Loss Statement, or Sales Receipts duly certified by a CA

In addition to these documents, the personal loan guide recommends keeping certain documents ready for verification such as your property documents like original title deeds, evidence that there are no encumbrances or charges on the property, a budget document from the architecture of the projected work, and expected reconstruction or renovation cost from an architect or a civil engineer as they may also be asked to be submitted by the bank.

Some of the top banks and financial institutions in India offering personal loans and the interest rates charges for the reconstruction of the houses are as follows:

Bank Name Interest Rates (Annual)
Bajaj Finserv 12.99%
Citibank 10.90%
ICICI Bank 10.75%
HDFC Bank 10.50%
Yes Bank 10.45%
SBI 9.60%
Axis Bank 6.75%

How can you apply for a personal loan to reconstruct your house?

  1. Check if you’re eligible: Check the bank’s eligibility criteria and calculate how much loan you can be approved for based on your income and property value beforehand.
  2. Loan application form: Duly file and sign the application form carefully. Always double-check the figures and details of the property mentioned in the documents as the approval process is based on these.
  3. Submission and verification of documents: Submit all the required documents to the bank. The bank conducts a verification process to check accuracy and property valuation.
  4. Approval of loan: Once the bank completes its appraisal and documentation process, it will either approve or reject your home reconstruction loan application. If the loan gets sanctioned, you will receive a sanction letter from the bank, and the sanctioned amount will be credited to the bank account.

This personal loan guide advises that before you apply for a home reconstruction loan, remember to compare loans offered by various banks and housing companies for the lowest possible interest rate, processing fees, penalties, eligibility criteria if there are any prepayment charges, and other terms and conditions.

A personal loan is disbursed, mainly based on your annual income and credit score. Also, since there is no requirement to give any security or collateral, the documentation involved in getting the personal loan is far less than any other loan such as a housing loan or vehicle loan. Banks like SBI, HDFC Bank, ICICI Bank, and Citibank offer personal loans for reconstruction at an affordable interest rate.

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Jarvis Abbott