By 2047, India’s real estate sector is expected to expand to $5.8 trillion, providing a positive boost to the price boom. With property prices expected to go higher, buyers are considering home loans for under-construction properties.
However, the process for taking out such a loan for an under-construction property isn’t easy. It comes with loads of complexities post the paperwork. In this blog, we will discuss everything about how to take a home loan against under-construction property, how to choose the right home loan providers, and more.
Home loan for an under-construction property
The foremost thing that you need to keep in mind that a home loan for under-construction 3 BHK apartments in Sushant Golf City Lucknow or anywhere else, the money doesn’t come all at once and easily. The financial institutions perform a stage-wise disbursement.
Borrowers like you pay interest rates on the disbursed amount throughout the construction period. This practice is called pre-EMIs smaller payment meant to cover only the interest. Once the final disbursement has made, the full EMI schedule starts when the construction completion date comes closer.
Patience is key to lowering upfront cost
Loan against an under-construction property is often comes with lower upfront cost. The only disadvantage is that it has a long waiting timeline with some uncertainties involved. If for any reason, the builders in Lucknow or any other part of India delay the project or miss the deadline, you may end up paying the pre-EMIs and rent simultaneously.
How to take a home loan for an under-construction project
One thing to keep in mind that banks offering home loans for under-construction projects have a length documentation requirements. Besides your usual KYC, they will ask for an NOC (No Objection Certificate) from the builder, stamped builder agreement, bank statements, latest proof of construction progress, income proof, and credit history.
Here’s a guide to know how to take a home loan.
Which banks offer loans for under-construction properties?
Major national and private banks provide home loans against under-construction properties. These home loan providers include:
- SBI
- Punjab National Bank
- Union Bank of India
- ICICI Bank
- HDFC
- Axis Bank
- Bank of Baroda
Each bank offers different interest rates, so you need to check with each bank and compare them. We recommend comparing each bank based on the document requirements, loan eligibility criteria, and interest rates. This will help you find the right lender for yourself.
Can you claim tax benefits on under-construction properties?
The income tax benefits can be claimed under Section 24 of Income Tax Act. The deductions can be claimed on the payable interest that the borrower pays during the construction phase. The only setback is that the benefits can be applied only after the project completion.
Conclusion
Many real estate builder such as, Jashn Realty, are putting up 3 BHK or 2 BHK flats in Lucknow for sale. If you plan to buy an under-constriction property, ask your builders every question directly before getting into an agreement.
With an under-construction property investment, you can keep the upfront cost low, however, unforeseen delays may make you regret your decision. We recommend buying a property only from a verified and credible builder.
