Taking New Loan on Property for Construction of House

POSTED BY Vinu ON January 20, 2012 5:43 pm COMMENTS (13)


I have Purchased a Plot by taking loan of 12 Lakhs from a Private and now I would like to construct a House on that Plot.

Still the Plot Loan is not paid up and I have 9 Lakhs Outstanding with the Bank.

Can I take new loan from Different bank (Preferably Government Sector) to Construct a House on the Plot?

As the Original Documents are with the Bank which provided Plot loan, Do I have to take House Construction also from the same bank ?

Please suggest. Thanks in advance.

13 replies on this article “Taking New Loan on Property for Construction of House”

  1. ashalanshu says:

    Dear Nilesh, the maximum loan term available in SBI is 30Y. @ 4.8L Rs. gross income, 20L Rs. loan amount (which is maximum @ 80-20 ratio) can be availed for 30Y term.



  2. ashalanshu says:

    Dear Nilesh, please apply for Plot+ construction loan if you want to consider the plot price also. SBI ‘ll accept the the combo and ‘ll sanction your loan accordingly. Yes at that time, post sanction, SBI may ask you to pitch in full plot price as your down payment towards the combo and SBI ‘ll pay for construction. This is how things work.



    1. Nilesh Patel says:

      Thank you very much.

    2. Nilesh Patel says:

      Dear Sir,

      Could you please provide your expert comment on following with regards to home loan

      1. What could be the maximum loan tenure for SBI Home loan for Selp Employed Husband & Wife (Co- Applicant) aged 36 & 34 respectively.

      2. What could be the MAXIMUM SBI Home loan eleigibility for Rs. 25 Lac House, Total Rs. 4.80 Lac Gross Annual Income of Husband & Wife (Co- Applicant) as per the Latest ITR, Loan Tenure as per point No. 1, No Other Loans as on Date as well as in the past.



  3. ashalanshu says:

    Dear Nilesh, as you are already owner of plot, SBI ‘ll consider only construction value for loan. hence you ‘ll get 80% of 15L Rs. as loan towards construction.



    1. Nilesh Patel says:

      Thanks a lot for your prompt and valuable reply.

      But sir,
      This means that SBI manager has mis-guided me.

      I want to make note here that I have not still made the sale deed of the plot but, when I approached the SBI, SBI Manager has advised me to make sale deed of the plot first and pay for the plot fully from my pocket and then approach to the bank for home loan with sale deed of plot & construction agreement.

      He told me that, they will consider the full amount (Plot + Const. Agreement) for the loan purpose.

      But, I was having doubt for the same as said by you.

      Thank you for guiding.

      Now I will again approach SBI before making sale deed and ask for the solution.

      You may also please suggest, the way out here.

      Warm Regards,

      Nilesh Patel

  4. Vinayak says:

    Thanks Ashal

  5. Dear Vinayak, there are 2 options with you.

    1. Apply for the construction loan with the existing bank

    2. apply with a new bank for plot loan transfer + construction loan

    Opt which one is more favorable to you.



    1. skverma says:

      Dear Ashal

      Whether we can take benefit of tax exemption for both plot and construction in the case if we transfer plot loan to another bank and take construction loan in addition.


      1. Dear SKVerma, yes is the answer.



        1. skverma says:

          Thanks Ashal,

          Why bank persons are saying that you can only claim for loan of construction not on plot. whether you have any reference to IT act stating the plot or land loan inclusion if plot is purchased for constriction of house. Is there any time limit within which i have to complete the construction of house.


          SK Verma

          1. dear Skverma, please read the wordings of section 24(b) of Income Tax Act, 1961. It’s clearly written there. To add to it, many of my friends had purchased the plot & constructed there on, of course with the loan for both & happily claiming tax benefit.



    2. Nilesh Patel says:

      Dear Ashal Sir,

      I have one query relevant to the Purchasing a Plot & then construct a house.

      I am considering a home loan with SBI,

      If plot of land is purchased without the bank loan and sale deed is made for say Rs. 5.00 Lac

      Construction Agreement is entered into with the developer for Rs. 15.00 Lac

      Now, Will SBI provide loan on total value of Rs.20.00 Lac or only consider Rs. 15.00 Lac for loan as Rs. 5.00 Lac towrds purchase of plot is alredy paid by the borrower?

      Question is that will they finance on Plot and consider the payment of Rs. 5 Lac made towrds purchase of plot as a margin money for say loan of Rs. 16.00 Lac (Rs. 20.00 Lac * 80%) for house and disburse Rs. 16.00 Lac as a loan.

      May pl. help.

      Thanks & Regards,

      Nilesh Patel

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