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3 Important Facts Which You Should Know About Under Construction Property Loans!

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By Author: Finway
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Are you looking to purchase a loan for under construction property? In this scenario, there are thousands of property projects to choose from. In every part of the area, several reputable builders are working on residential and commercial properties. However, before purchasing such a house, you should review the following home loan facts for under-construction properties.

EMI on the loan sum that has been approved

If you take out a construction property that is still being built, your EMI would be based on the approved loan amount rather than the disbursed loan amount charged to the builder. Let us use an example to provide you with more details. Assume a bank has approved a loan of Rs 35 lac, and the bank has disbursed Rs 10 lac to the builder because the property is still under construction. In this scenario, you will be required to pay an EMI for the entire loan sum, i.e. Rs 35 lac, which is Rs 33,776 at a 10% annual interest rate.

Borrowers, on the other hand, often invest in a building project to defer loan repayment. This high ...
... EMI outlay in the first month can be a financial burden, particularly if the borrower is also paying monthly rent on top of the home loan EMI. A ready-to-move-in house would have been a safer choice for the borrower.

Benefits from Taxes

You will get decent tax incentives if you take out a loan on a property that is still under construction. Section 80 C will assist you in obtaining an additional sum for savings. With the small business start-up loans on an under-construction house, you can avoid paying stamp duty and registration fees.

According to Vaibhav Sankla, director, H&R Block India, "interest for the pre-construction time can be deducted in five equal instalments from the year the construction is completed."
The tax advantage is available when you file your income tax returns. The sum charged for stamp duty and the registration process is tax-deductible under Section 80C. "However, when the property is under renovation, the tax refund on principal repayment may not be allowed,” he adds. If the ownership of the property is postponed, the tax benefits are also delayed to the same degree.

Increased Liability

Borrowing money from a bank for a project that is still under construction will backfire if the project is delayed or defaults. In this case, the loan will only be settled when the borrower repays the bank the disbursed sum plus interest. You must do one thing to prevent certain situations when taking out a loan. Before taking out a home loan, look at a builder's track record and credibility. In such challenging circumstances, a reputable builder would never drive.


Given the rise in real estate activity and the incorporation of newer and more appealing amenities into homes, as a property buyer, you may choose to invest in an under-construction property rather than a pre-existing small business start up loans. Such properties are generally less expensive, with prices at least 20% lower than comparable properties in the region.

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