Land Purchase and Building Construction Loan
Apart from Home Loan and Loan against property which are a tailor made products of all the financial institutions, there are certain Loan which can be availed by the borrower for purchasing a vacant land and to construct a building on it.
This is a facility wherein, the lender pays the amount to purchase the land upfront, and release the construction expenses in various phases depending on the completion stages. The borrower to repay the loan in the form of installment once the construction is completed and the building is operational. During the period of construction, the borrower to pay the interest amount only as per the outstanding. Thus the borrower has a lesser burden to pay off the loan immediately after getting it. On the other hand, lenders are also not releasing the entire amount sanctioned at one go, which reduces the risk exposure at the beginning of the construction.
This type of facility is useful for constructing residence, office or manufacturing units. Such loans can be availed by individuals or business entities.