A construction loan is the type of loan that one gets to finance the construction of a new building or buildings. There are two basic kinds of construction loans: home construction and commercial construction. New home construction loans are typically acquired by the homeowner to cover the cost of the builder and building materials. Commercial construction loans are acquired to cover the cost of building commercial or industrial structures.
Construction Loans- Good as an Interim Measure of Financing Construction Activity
Construction loan is a special loan that is drawn by people to fulfil the resource crunch that house construction activity is normally associated with. A construction loan comes with certain features that are distinct from the other regular loans. First, it is a short-term loan. Second, there are no fixed set of rules to define its terms.