Home Loan Disbursement Process For Under Construction Property​

Investing in under-construction properties offers affordability and long-term benefits. It is a popular choice among homebuyers. These properties provide flexible payment plans and potential appreciation in value over time. Opting for a home loan for properties, such as the home loan disbursement process for under-construction property, adds further advantages, with staged disbursements ensuring efficient fund management. Buyers also gain the opportunity to customise their homes and enjoy modern amenities.

This blog explores the concept of under-construction properties, the home loan disbursement process for under-construction property, and the associated benefits and requirements for prospective buyers.

What are Under-Construction Properties?

Under-construction properties refer to residential or commercial buildings that are still being developed and are not ready for immediate occupancy. These properties are typically more affordable than ready-to-move homes, offering buyers an opportunity to invest at a lower cost. They often come with flexible payment plans, with instalments based on construction progress. Moreover, buyers can customise interiors and layouts to suit their preferences, adding value to their purchase. Additionally, under-construction properties tend to appreciate over time, making them a good investment option.

Exploring the Home Loan Disbursement Process for Under-Construction Property

Home loan disbursement occurs when the lender releases the approved loan amount to the borrower or the builder, depending on the property type. The disbursement happens in stages for under-construction properties and is tied to the construction progress. After loan approval and documentation, a portion of the loan is released.

Subsequent disbursements are made as the builder completes specific construction milestones.

During this phase, borrowers pay pre-EMI, the interest on the disbursed amount, rather than the full EMI. Once the property is completed, the remaining loan amount is disbursed, and the borrower begins regular EMI payments, covering both the principal and interest.

Alternatively, based on a prior agreement with the lender, borrowers can also start making full EMI payments from the first disbursal. This phased home loan disbursement process for under-construction property ensures efficient fund utilisation and borrower convenience.

Key Benefits of the Home Loan Disbursement Process for Under-Construction Property

Some key benefits of this home loan disbursement include:

• Lower Initial Costs: Home loans for under-construction properties typically require payment in instalments based on the construction progress. This reduces the financial burden compared to paying the full amount upfront.
• Affordable Prices: Under-construction properties are usually priced lower than ready-to-move homes, allowing buyers to invest at a reduced cost.
• Tax Benefits: Borrowers can claim tax deductions under Section 80C for principal repayment and under Section 24(b) for interest paid after construction is completed.
• Customisation Opportunities: Buying an under-construction property allows buyers to customise interiors and layouts as per their preferences.
• Potential Appreciation: The value of under-construction properties often increases over time, offering good returns on investment.
• Better Planning: Instalment payments provide time to plan finances effectively, making it easier to manage monthly EMIs.
• Modern Amenities: Such projects often include top facilities and infrastructure that enhance the living experience.

Required Documents​

Here are the documents that may be required for the home loan disbursement process for under-construction properties:

Different Stages of Home Loan Disbursement​

These are the different stages of the home loan disbursement process for under-construction properties:

• The borrower submits the required documents for loan approval. Lenders, including SBI and HDFC evaluate the application and sanction the loan.
• The lender disburses the first instalment after signing the loan agreement. The disbursement is based on the agreed terms and the project’s initial stage of construction.
• The borrower pays only the interest (Pre-EMI) on the disbursed amount during construction. The Pre-EMI amount increases as more funds are disbursed.
• Once the property is completed and the builder receives the completion certificate, the lender disburses the remaining loan amount.
• After full disbursement, the borrower starts paying the regular EMI, including the principal and interest. The EMI is calculated based on the total loan amount and tenure.

Why the Disbursement Process for Under-Construction Property is Important?

Under-construction properties are an excellent investment choice for buyers seeking affordability and modern facilities. Home loans for these properties, such as the SBI home loan disbursement process for under-construction properties, simplify financial planning with staged payments and pre-EMI options during construction. Learning the home loan disbursement process for under-construction property ensures the right decisions and most benefits. This includes tax deductions and potential appreciation.

Frequently Asked Questions (FAQs)