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Tata Capital > Blog > What is the Home Loan Process for a Flat which is Under Construction?

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What is the Home Loan Process for a Flat which is Under Construction?

What is the Home Loan Process for a Flat which is Under Construction?

Apart from choosing a trendy exterior design and exceptional décor, what else is key to building your dream home? Funds, of course! Nowadays, with housing finance, you can pay for labour costs, acquiring construction materials, and additional construction expenses.

Besides, with a home loan for construction, you don’t have to handle a huge loan amount at once. Yes! You get funds precisely as and when the construction requires.

For ready-made houses, lenders often disburse funds in one go. However, for an under-construction property, the lender releases the approved loan amount in several instalments. The disbursal depends on the construction progress.

But before you approach a lender, here is all you need to know about the home loan process for under construction flat.

The housing loan process for under-construction property

#1 Choosing your lender

Any borrower’s first instinct is to pick a lender that offers the most attractive home loan interest rates. While that should be a priority, you should also look for processing fees, pre-payment charges, foreclosure fee, and other miscellaneous charges.

Also, the loan amount is finalized based on the building prints and construction blueprints. Once fixed, you cannot change the construction plan. Therefore, keep the final outline for the property ready before approaching the lender.

 You should also use a loan EMI calculator to get hold of ideal EMIs and interest payable in advance.

Additional Read:  Home Buying In 2021: Is It the Best Time to Buy A New House Now?

#2 Applying for the loan

Once you have zeroed in on a lender, you can begin with the application process. This step usually includes filling an application form, providing the necessary documents, and paying the processing fee. The paperwork required for under-construction housing loans varies from the regular housing loans.

Here’s the list of home loan for under construction property documents that you need to submit:

  • KYC (Know Your Customer) documents to show your income proof
  • Khata Certificate and Khata extract
  • Letter from builder/architect indicating the progress of construction
  • No Objection Certificate (NOC) from the builder on their letterhead
  • Sale deed
  • Agreement with the builder duly registered and stamped

If the registration of your residential project is still pending, you must seek the following documents from the builder:

  • A true copy of the agreement with the builder
  • Original copy of ‘money receipt’ issued by the Sub-Registrar
  • Own contribution amount proof
  • Acknowledged copy on authority letter, addressed by the applicant to the Sub-Registrar
  • Copy of the authority letter acknowledged by the builder

Additional Read:  Home Loan Tax Benefits for Under Construction Property

#3 Loan sanction and disbursement

Once your under-construction flat home loan application is approved and all your documents are verified, the lender will sanction the promised loan amount within a week or two.

Over to you

Now that you know the under-construction housing loan process, a reliable financier is all you need. We at Tata Capital provide tailored home construction finance with home loan interest rates, starting at 6.90%. Our easy eligibility terms, limited documentation requirements, and flexible repayment options leave little to be desired.

Begin your loan planning with our home loan EMI calculator. Connect today!

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