Below mentioned are 5 tips on home loan for under construction projects that can help in this planning:
1. Do Your Research: Ensure that your property of investment is actually profitable. For that, it is advisable that you research the locality’s property value and compare it to the price quoted by the builder. Understand the terms and condition of the property deal. After doing this research, estimate how much funds you can manage on your own for investing in the property and how much amount would further be needed as a home loan. It is important that you do all these calculations before approaching any home loan provider.
2. Check Builder’s Commencement Certificate: As a potential property buyer, you need to maintain certain caution. Ensure that your builder has gotten approval from all the concerning authorities for building the project, especially a Commencement certificate. A Commencement certificate ensures that your builder has been legally approved for constructing the said project. A copy of the commencement certificate of the builder improves your chances of availing a home loan.
3. Negotiate Property’s Price: Once you have checked the necessary legal documents for the under-construction project it is safe to proceed and make the deal. However, make sure you negotiate the price quoted by the builder. You can include points such as the property’s potential resale value or accessibilities to amenities for price negotiation. This saving could potentially bring down the amount of your housing loan, further bring down the EMIs for loan repayment.
4. Keep a Tab on Construction’s Progress: It is important that you keep a track on the ongoing progress of the construction after applying for home loan. It is also advisable that you maintain regular contact with your builder as well as your home loan provider throughout the construction phase. This would help you determine how far along the project has come and whether the disbursal of the home-loan instalments is happening as per schedule. If at any point you feel that the project is not progressing as promised, you can instruct your home loan provider to stop disbursing any further instalments.
5. Tax Benefits: You can claim tax benefits for repaying your under-construction home loans too. You can claim a tax benefit of up to ₹2 Lakhs on the interest component of the loan while an additional ₹1.5 Lakhs on the principal amount under Sections 24B and 80C of the Income Tax Act of 1961, respectively.