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All You Need to Know About Composite Home Loan

Jan 02, 2023
All You Need to Know About Composite Home Loan

We all have envisioned building our house of dreams, and the very thought of doing so can be truly amazing. Your house can be designed at your convenience and can have all the necessary amenities that suit your preferences which will have the taste of your needs and desires. The home we build for ourselves must speak volumes about our inner personality; also, if you are planning to build your own home, the easiest thing to do is apply for a composite home loan that will get you the funds you need.

This article is about composite loans and all the relevant details you need to know.

What is a Composite Home Loan Scheme?

A composite loan or composite home loan is the way to build your residential plot and construct a full-fledged house within a stipulated time window. A composite loan is mainly laid out by financial institutions in cases where a plot of land or house is bought to build a structure.

In India, there are various types of loans that are offered, which includes home loan, home construction loan, land loan, etc. A composite home loan, in this case, differs from a regular home loan since it allows borrowers to buy land and construct the house too.

While applying for a composite loan, the lender must know your reasons for building or constructing a home loan. Thus, submit the construction plan followed by the figure for construction cost. Additionally, you must also submit all the relevant documents. This will help the lender disburse the loan amount.

8 Things To Know About Composite Home Loan

Here are a few things to know about a composite home loan:

1. High Rate Of Interest

The rate of interest for composite loans is higher than for regular home loans. This is primarily because composite home loans cover the cost of land and construction. However, this can prove to be beneficial in cases where you do not wish to deal with multiple loans or top-ups.

2. Construction Deadline

After the composite loan is sanctioned, the construction of the house should ideally begin within 1-2 years. If the duration of construction increases, the lender can increase the interest rate.

3. Completion Certificate

Once the construction of the house is complete, it is essential to provide a completion certificate to the lender and consecutively make EMI payments. The flexibility to avail of tax benefits will only begin after construction.

4. Tax Benefits

Under the Income Tax Act, you can enjoy the composite loan tax benefits if your house is constructed within 3 years. The tax benefits can be availed on the principal amount and the interest.

5. NRI Eligibility

Similar to Indian citizens, NRIs are also eligible to apply for a composite home loan. The entire process is the same for everyone. Please note, Fullerton Grihahshakti only considers eligible applicants for home loans who are resident Indians.

6. Amount Disbursal

When you apply for the loan, the institution settles the amount by disbursing it directly to your account. Since all your loan plans are already documented with the lender, be conscious not to use the money anywhere else.

7. Mandatory House Construction

When you have a composite home loan, it is significant to construct a home loan on the purchased house. This makes the construction of a house within 2 years of availing of the loan a crucial exercise.

8. Difference Between Composite And Land Loans

Ideally, a land loan is granted only to purchase land. However, a composite loan scheme lets you have a loan for both, i.e., land and construction. All that is needed is to lay out a plan with your lender.

Documents Required & Eligibility For Composite Home Loan

Knowing your eligibility before applying for a composite home loan is significant, especially to eradicate other underlying trouble. The outline of the eligibility criteria for a composite home loan are as follows:

  • Credit Score: 700 or above.
  • Employment Type: Salaried or Self-Employed.
  • Income: INR 25,000 if the city of residence is Mumbai or Delhi, else, INR 20,000 per month.
  • Age: From 21 to 65 years.

The mandatory documents required for applying for a composite home loan are:

  • Land loan application form with a recent photograph
  • Processing Fees
  • Identity Proof
  • Form 16 and Salary Proof
  • Residence Address Proof
  • Buyer Agreement
  • Account Statement (Past 6 months)
  • Proof of Residence
  • Assets and Liabilities Statement


Building a house from scratch comes with a set of challenges, and it starts with choosing the right financial institution that will take care of all your needs. It is all worth the cost if the house is exactly as it is supposed to be. SMFG Grihashakti lets you apply for an affordable home loans that allows you to build the house of your dreams. Apart from the simplified loan approval process, we offer affordable home loan interest rates starting from only 9.5%* (for salaried individuals), flexible EMI tenures (up to 30 years), and easy repayment plans.

All you need to do is check your eligibility criteria and apply for a home loan, today!

Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

SMFG India Home Finance Co. Ltd. (Formerly Fullerton India Home Finance Co. Ltd.)
CIN number: U65922TN2010PLC076972

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