Are you going to purchase an under construction flat in Thrissur from a top builder in Thrissur? Certainly, you must be baffled with a chunk of queries. In this article, we are going to provide you with a handy guide to solve all your queries so that you can complete your home loan process in a hassle-free way.
Certain things you need to be careful while purchasing an under construction flat. Because most of the banks are a little apprehensive while sanctioning home loan for an under construction property. Thorough documentation is required to complete the process. Also read about some property documents checklist here.
Documents Required for a Home Loan for an Under Construction Flats in Thrissur
Let’s take a look at some important documents that you need to submit for home loan process for under construction flat.
When You are Buying Directly from Builders
- A No Objection Certificate (NOC) is required from the builder on their letterhead.
- Letter from the builder where all the latest progress of construction is mentioned clearly.
- Agreement with the builder duly stamped and registered.
- Your own contribution amount proof.
When You are Buying from the Registered Cooperative Housing Society
- You need to share certificate and registration certificate of society.
- Your own contribution amount proof.
- No Objection Certificate (NOC) is required from the society on their letterhead
The tripartite agreement is a pivotal legal document which involves the buyer, lender and the builder. This document shares the status of all parties involved in the process and keeps an attentive eye on the documents.
The Home Loan Process for an Under Construction Property
It is true that home loan application for an under construction apartment remains more or less the same for every nationalized or private bank of India. There are only a few things that can be varied from one bank to another. However, every bank will ask you to submit all original documents of the property. They will verify them thoroughly and once they are satisfied, they will start your home loan process. The advantage of buying a Flat from top builder is, they normally take approval of top nationalized banks and top private banks. Once the project is approved by a bank then they’ll ask only for the borrower’s documents. Check out Home loan assistance.
At first, you need to submit your application for home loan. You can easily submit this application either by visiting the bank office or online. You need to submit the application form along with a list of KYC ( Know your Customer) documents for the loan process. Here, we are mentioning the list of documents that are required for this process.
- Your ID proof
- Your address proof
- Your income proof
- Your bank balance statement
- And your employment details
- Your 3 years form 16 or ITR filed copies
Once you have successfully submitted all your documents along with the application form, the bank will send its representatives for a field investigation to verify all the details minutely that you have mentioned in your application. Once the representative will verify and cross-check every information, the loan process will be sanctioned by the bank.
Once your every financial and technical valuation is completed, the loan registration process begins. In this process, the applicant (you) is required to submit all the legal documents along with the signed home loan agreement.
Now, take a look at home loan disbursement stages for an under construction flat.Once your registration process is completed, the bank will automatically disburse the agreed loan amount to the builder. The bank will keep all the original documents with it until the full repayment of the loan.
The Pre – EMI Process
When you are purchasing an under construction property, your bank may link the disbursal of home loan to the construction stages of the property. For any under construction property loan, banks never disburse the entire loan amount in one-shot to the borrower rather they give it in various instalments. That’s why you need to pay the pre – EMI only on the disbursed loan amount and not the entire sanctioned loan amount.
For example, if you are taking a home loan of INR 70 lakhs for a property which is under construction, then, in this case, your bank will not disburse the entire INR 70 lakhs at one time. The bank will disburse the amount in instalments. Suppose, at first, the bank disburses INR 20 lakhs to the builder. Now, you need to pay the pre – EMI just only on the INR 20 lakhs, not on the entire 70 lakhs. This is the payment schedule for under construction building.
The construction stages for a property can be divided into many phases including an agreement stage, foundation completion and ground floor stage and the completion of other subsequent floors. It is true that the interest rates may vary from one bank to another. Here are some low cost house construction methods in Kerala for you to check out.
Tax Benefits for Home Loan Process for Under Construction Property
You can claim for tax benefits for the home loan that you have taken for an under construction property. But this can only be done once you have received the Occupancy Certificate from the builder or after the possession. For an under construction property, the time period for a home loan is divided into two parts.
1. Pre-Construction Period:
This is the time period when the loan has been taken to the time before starting the construction of the property.
2. Prior Period:
This is the time period until the construction is completed or acquisition is made. The interest that you need to pay in two periods against your loan amount is known as PPI (Prior period Interest).
Home Loan Tax Benefits Under Section 80C – Principal Deductions
Section 80C Deals with the Principal Amount Deductions:
For both self-occupied and let-out properties, you can claim up to Rs.1.5 lakh every year as a deduction.You also need to complete the construction of the property and only then claim the deduction.To claim this deduction, you should not sell your house within 5 years after possessing it.If you sell your house within 5 years after possession, any deduction claimed will be reversed in the year in which you sell it. This amount will also be added to your income for the year of sale.If you are a co-borrower and co-owner, you can each claim up to Rs.1.5 lakh as principal deduction.You can also claim the stamp duties and registration fees paid for your property under this section. Consider these important things while you are planning for buying an apartment in Kerala using home loan.
Home Loan Tax Benefits Under Section 24 – Interest Deductions:
This section deals with the yearly deductions related to the interest you pay on your property loan. The relevant details are given below:
- If your property is a self-occupied one, you can claim a maximum deduction of Rs.2 lakh.
- If you let your property out on rent, you can claim any amount you’ve actually paid as interest. There is no limit.
- If you’re a co-borrower and also co-owner of the house, you can each claim up to the maximum deductible amount under this section.
- The Rs.2 lakh deduction applies only if you complete the property (for construction) within 5 years. If the construction is not completed within this period, you can claim only up to Rs.30,000.
- If the property is given on rent, you can claim any amount actually spent as interest, whether it is completed or not.
Tax Benefits Under Section 80EE – Additional Interest for First-Time Buyers
If you’re buying a house for the first time, you can claim the following interest deduction in addition to the benefits already mentioned above under Sections 24 and 80C:
- You should have taken the loan between 1 April 2016 and 31 March 2017.
- Your property must be valued at less than Rs.50 lakh.
- The amount of home loan you take must be less than Rs.35 lakh.
- You can claim an additional interest amount of up to Rs.50,000 every year till you repay the loan.
Some Tips for a Home Loan for Under Construction Project
Here, we are mentioning some imperative tips that you should consider while applying for a home loan for an under construction property.
1. Ensure that Your Builder has Received the Building Permit or Commencement Certificate (CC):
Even signing any document for an under construction property, don’t forget to check whether your builder has the Commencement certificate or not. Also, check if the builder has all the necessary documents to start the project or not. Every builder should get a compulsory Building Permit or Commencement Certificate (CC) to initiate the construction process.
2. Contact the Lender to Know Whether Your Loan is Approved or Not:
Though your builder will share all kinds of information including the loan amount with you, still, it’s your responsibility to contact the bank to check whether your loan amount is approved or not. As a buyer, you also have every right to inquire about your builder’s authenticity.
3. Wait for Appreciation on the Property Value:
It is always advisable to wait for a longer period if you want to enjoy the actual benefit of land value appreciation. In any type of property investment, a minimum of 8-10 years is a reasonable period to get a good appreciation. So, don’t make any hasty decision.
Hope, the above-mentioned information will help you to get an idea regarding home a loan process for under construction flat in Thrissur or elsewhere. You can take assistance from the experts to know more details regarding the same. Also read about How to ensure that your home loan application does not get rejected.
TBPL is one of the best providers of apartments in Thrissur ,They also provide property management services that include housekeeping, rental and resale activities to help people manage their assets efficiently. To get our value added services, contact us today itself.