After living on rent for more than a decade, Neha has finally decided to purchase a house. However, she has chosen an under-construction property to invest in as these are comparatively cheaper than other properties. Also, if she avails of a home loan to finance that, it will become much more affordable for her.
However, before moving forward, there are some intricacies of a home loan for under-construction properties that potential borrowers must know. Scroll down to know what they are.
Here are some useful features and benefits of home loans for under-construction properties:
Other than these, availability of tax benefits, attractive interest rates, etc., are some additional reasons why one should go for this form of credit.
Here is a list of interest rates on home loans reputed lenders are offering:
|Navi Home Loan
|Starts from 8.74% p.a.
|Bank of Baroda
|Starts from 8.60% p.a.
|Starts from 8.60% p.a.
|Starts from 8.75% p.a.
|Starts from 8.75% p.a.
If you want to make the most of the benefits of home loan for under-construction properties, you must meet these eligibility criteria:
Other than these, you should also check the LTV lenders are offering, whether they are looking for a co-applicant, additional lender-specific aspects, etc.
The document requirements vary across different lenders, and it is advisable to go through all the lender-specific criteria before submitting the loan application. Here is a list of documents you need to furnish to avail a home loan for under construction properties:
In case the registration of the project is not complete, borrowers can obtain certain papers from the builder before applying for a home loan. One can claim the following documents in this regard:
Apart from these, your chosen lender might ask for additional documents. Make sure to check the website and the documents required for this loan before you apply for the housing loan.
The process to avail a housing loan for under construction properties is somewhat similar for every lender. In case you are applying for the loan at Navi, here are the steps you need to follow:
In case you are investing in under-construction properties, you might require a sizeable amount. Navi offers home loans of up to Rs.5 crore at an interest rate starting from 7.39% p.a. Even though you get access to such a large amount at an affordable interest rate, it is advisable to obtain as much as you truly need.
Before making such long-term commitments, use Navi’s EMI calculator to evaluate your monthly obligations.
Other than assessing EMIs, there are some additional aspects borrowers should pay heed to before taking a home loan for under construction properties:
It is necessary to know that every construction project does not get legally approved. Before investing in such a property, you should go through all the relevant documents to avoid the unwanted hassle. Check if the builders have the commencement certificate with them, and they have gotten approval from concerned authorities.
When you are spending a huge amount on a specific property, you should track its progress. This way it becomes easier for you to understand if the disbursal of the loan installments is going on according to the set schedule. In case you notice any kind of discrepancy, get in touch with the lenders and ask them to hold the loan disbursal.
When you opt for a home loan for under construction properties, you are eligible for tax benefits. Under Section 80C of Income Tax Act, 1961, a home loan borrower can claim tax deductions of up to Rs. 2 lakh for the interest paid annually. Apart from this, it also allows tax deductions of up to Rs. 1.5 lakh for principal repayment on home loans for under construction properties.
You should also know that you can claim the tax deductions on interest paid only when the construction of the house is complete within 5 years.
These days home loans for under-construction properties are available at moderate interest rates. However, apart from the rate of interest, one should also check the processing charges and applicable taxes before making a decision.
Ans: It is not mandatory to have a co-applicant avail a home loan for an under construction property. However, applying with a co-borrower does come with certain advantages. Especially if you have a poor credit score and your co-borrower has a decent one, it helps in getting prompt approval for the loan. Also, note that if the property has multiple owners, you have to include them as co-applicants.
Ans: These are some of the ways in which you can improve your home loan eligibility:
• You can have a co-borrower to avail a home loan for an under construction property with you.
• Clear your existing dues within the stipulated time to increase your credit score.
• In case you have some additional income sources, mention them to your lender.
• Go for a longer tenure.
Ans: Under the Income Tax Act of India, a home loan borrower can claim pre-construction interest. However, that is possible only when the property construction is done in five equal instalments. Note that to claim the interest component, completion of the property construction will be necessary.
Ans: Home loan interest rates are of two types – fixed interest rate and floating interest rate. In the case of the former, the equated monthly instalment amount stays the same for the entire repayment tenure. On the other hand, floating interest rates keep changing depending on the market condition and the change of lending rates.
Ans: In order to reduce the interest burden of your existing home loan, you can follow these tips:
• Go for a shorter tenure, as that will automatically help in decreasing the total interest payable.
• Make use of the part-payment feature as that reduces not only the monthly instalment amounts but also the overall interest outgo.
• Refinance your existing housing loan to another financial institution that is offering a comparatively lower interest rate.
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.60% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
|Home Loan Interest Rate
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