Home Loan for Under-Construction Property


As a result of the skyrocketing property prices, nowadays,many prospective home buyers are eager to check out under-construction properties that suit their budget. The value of an under-construction property is usually 20-25% lower than the prevailing rate in the locality. Thus, investing in an under-construction property can prove to be fruitful in the long run. To finance the purchase, consider availing a home loan for an under-construction property.

Below, checkout some important pointers on home loan for under-construction property:

  • For an under-construction property, the loan amount is disbursed in phases. The lender monitors the progress of the project and disburses the loan amount accordingly. However, you may be expected to pay the EMI on the total approved loan and not the disbursed loan amount.For instance, if yourapproved home loan amount is Rs. 50 lakhs for 20 years, and the bank has disbursed only Rs. 10 lakhs to the builder, your EMI will be calculated on the entire loan amount of Rs.50 lakhs, which is Rs 40,280 at 10%.
  • To lower your EMIs, you can opt for pre-EMIs, which include only the interest componentof the home loan. When availing a home loan for under-construction property, make sure to check whether your lender offers the pre-EMI facility.
  • If you are staying in a rented apartment, paying both EMI and monthly rent can be financially challenging. Moreover, if the construction of the property is delayed, it can further add to the financial burden. Thus, you should consider the track record and reputation of the builder when purchasing an under-construction property.

Have a look at some home loan benefits for under construction property:

  1. Low-Interest Rates

The interest rates charged on home construction loans may vary from one bank to another. With reputed banks, you can avail home construction loans at competitive interest rates if you have a good credit score and high repayment capacity.

  1. Flexible loan tenure

The loan tenure can range from 1 year to 20 years. The tenure of the loan would depend largely on the amount borrowed and your repayment ability.

  1. Tax benefit

Once the construction of the property is completed andyou receive the Occupancy Certificate from the builder, you can avail tax benefits up to Rs 2 lakh for the interest component and up to Rs 1.5 lakh of the principal component of the home loan.

You can realize your dream of purchasing a house by availing a home loan for under-construction property. Additionally, affordable interest rates and long repayment tenures can lower the repayment burden. You can get an estimate of your home loan EMI with the help of an online home loan EMI calculator. It is advisable to settle for an affordable EMI, as this will make repayment easier and avoid the possibility of default. Lastly, when applying for a home loan for under-construction property, do not forget to check the credibility of the lender. This will help you avoid any inconvenience later.

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