The concept of construction loan vs home loan will never get clear if you do not know what they mean. Let me explain both types of loans in simple words here. A construction loan is a short-term loan that is availed to finance the construction of a home or other real estate property.
On the other hand, a home loan is a loan that an individual borrows from a financial institution to buy, resale, construct, renovate or extend an existing property. I hope this gives you at least some idea on what is the difference between construction loan vs home loan. Let me share more differences between the two.
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What are the differences between a construction loan and a home loan?The differences between a construction loan and a home loan are-
| Home Loan | Construction Loan |
Applicants avail of a home loan to buy a constructed property, under-construction property or to buy properties that are planned to be constructed in the future |
Applicants opt for a construction loan to construct a building be it for residential use o investment purposes |
The home loan process is simple |
The construction loan process is a bit tricky |
Home loans can be availed offline or online both |
Construction loans can be availed mostly offline |
The interest rate of home loans remain between 6% to 10% |
Interest rate on home construction remains between 10% to 14% |
The construction loan vs mortgage loan is also simple. A mortgage loan is a loan or agreement signed between the lender and borrower. It allows the lender to take your property in the event of failure of repayment of the debt. Mortgage loans are taken to buy a home or to borrow money against the value of the property your already own. But in the case of a construction loan, no such property needs to be mortgaged.
These details must be enough to help you understand the construction loan vs home loan difference.
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What is the Difference between Construction Loan vs Home Loan?
Payel
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1 Year
2023-03-13T17:43:31+00:00 2023-03-13T17:47:46+00:00Comment
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