The bank extends construction house loans to the builder during construction. It is the builder who deposits the interest till the construction is completed.
If you do not wish to take up the added burden of EMIs and the rent on the existing house, you have to pay EMIs after possession. Sounds like a safe deal, right? However, choosing the right home loan should be a prudent choice. There could be many low credit score loans on your table, but you need to choose a trusted facility with a secured system and fast turnaround time.
What you can do to avail an under-construction house loan!
Once you are all set with a knowledgeable team to assist you with a convenient application procedure, here's what you can do to avail an under-construction house loan seamlessly.
1. Don't hesitate to negotiate
It's always better to cross-check. Whether you think the price quoted by the builder is reasonable, initiate a negotiation deal. Some builders tend to quote a general amount and are open to negotiation on a project-to-project basis. A good reason to do this is in case your property is situated in a remote area. In that case, you would not want to reap a loss in the resale value.
2. Scan your loan company's application form
Non-adherence to this could invite legal or financial repercussions for you. Make sure to go through the terms and conditions, the rate of interest, and the mode of application. Also, watch out for the preferred approach for the gradation of risks in the loan agreement.
3. Correspond actively
Time is of the essence in any deal. It will help if you stay updated with the status of your loan application. While some financial services offer instant approval, some have a waiting period. Do your research if you are in a rush.
4. Know your builder
Recently, many incidents of fraudster builders have been cropping up. In most cases, buyers are generally unwary of the background of the builder. Apart from ensuring that the builder has all the necessary documents, ensure that he is registered with the concerned authorities. This will improve your creditworthiness before the bank/lender and provide redressal in any mishap.
5. Payment with progress
Another tip to go smooth with your loan is to Don't pay your builder unless actual progress is made on your project. Falling victim to a pre-payment schedule is a common mistake. Ensure that your lender disburses a part of the funding at decided intervals during the construction to avoid misjudgment of funds.
Conclusion
Buying a home is a particular and huge investment. Do your research before availing of construction home loans. Follow the tricks given above and assess your benefits before paying the builder.
