Given the increase in real estate activity with newer and more attractive features being incorporated into homes, as a property buyer, you may prefer investing in an under-construction property instead of an existing home. Such properties are usually cheaper and are priced at least 20% lower than other properties in the locality. This, coupled with a home loan, can make your purchase truly affordable. But, since buying a property involves large sums of money, it is important that you are mindful of a few details so that you can maximise your benefits.
Here are some tips to keep in mind when purchasing an under-construction property using a home loan.
Choose a builder with a commencement certificate
New housing societies and buildings are a dime a dozen these days and all of them may to boast of state-of-the-art features. But there is more to a property than just its appearance on a glossy brochure. As a buyer, you must ensure that the builder has the legal documents to construct the property. A commencement certificate is especially important since it means that the builder can continue with the construction and isn’t involved in any legal hassles.
Negotiate for a good price
Builders may often charge you a high price to make bigger profits. While the price may seem reasonable in comparison to rates prevailing in the neighbourhood, you mustn’t shy away from negotiating a price that is in line with your budget. If you are successful in bringing down the price, you will be able to borrow a home loan for an under-construction property with a lower amount easily and ensure quicker repayment.
Additional Read: Home loan tax benefits for under construction property
Opt for a lender who helps with property analysis
The right lender will not only give you the funds you need to buy an under-construction property, but will also help you evaluate the property itself. In fact, inputs from the lender can be invaluable in this regard. For example, a loan provider with a property search service can help you get the builder’s credentials and ensure that you are parking your money with a trusted lender. Such services will help you select a builder who has a good reputation and has a home that matches your budget and preferences.
One such lender is Bajaj Finserv. Their home loan comes with several benefits apart from a high loan amount. The property search service will help you zero in on the best home for your budget, and the property dossier service will guide you through the legal and technical aspects of buying a home. By opting for a Bajaj Finserv Home Loan you can also benefit from a quick approval, a 3 EMI holiday, nominal rate of interest and flexible prepayment terms.
Be in touch with the lender and keep track of construction
It is important to keep in touch with your lender and builder during the process of construction and loan disbursal. This helps you to keep track of the process and know whether or not the lender should release the next payment. Even if the builder urges you to make early payments as per the schedule, you should pay as per the progress being made. If you don’t see progress in line with the terms of the agreement, you can accordingly request the lender to delay the transfer of the next instalment.
Home Loan Disbursement Process for Under Construction Property
A home loan for an under-construction property is usually disbursed in tranches. You will avail portions of the loan as and when the builder demands payment.
Some lenders only charge the EMIs on the amount disbursed. Hence, the monthly instalments remain much lower.
Contrarily, some financial institutions may need you to pay the EMIs on the entire loan amount even if you have availed a smaller portion of it.
Income tax benefits on home loans are not available for under-construction properties. You can only avail the tax exemptions after the construction is complete. You can avail the tax benefits on the interest paid during the construction in 5 equal instalments in such cases.
Under the legal complexities of buying an under-construction property and choosing a good home loan to finance it can make the process smoother and safer for you.
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