What to Know Before You Buy a Home That’s Still Being Built
Buying an under-construction home is an exciting journey. For many, it means being able to afford a bigger or better-located home than a ready-to-move-in option. You get to track the progress, sometimes even customize elements, and enter at a lower price point. But it also comes with its own legal, financial, and planning considerations — especially if you’re opting for a home loan.
If you’re thinking of buying an under-construction property in India, here’s a simple guide to help you understand how loans for such properties work and what you should look out for.
What is a loan for an under-construction property?
A home loan for an under-construction property is just like any other home loan — but disbursed in stages, not all at once. The lender approves your total loan amount, but releases the money to the builder in parts (called tranches) as the construction progresses.
This ensures that the loan aligns with the actual work done on-site — and you pay interest only on the amount disbursed at each stage.
How does the disbursement process work?
Let’s say your total approved loan is ₹50 lakh. The builder will request funds from the lender at different construction milestones — like after foundation work, slab casting, brickwork, etc. The bank or NBFC will inspect the progress and release the amount accordingly.
In this construction-linked disbursal model, you only pay pre-EMIs (interest on disbursed amount) until the full loan is released. Once the final disbursement happens, your EMI payments begin in full.
Pre-EMI vs Full EMI: What should you choose?
Most lenders give you the option to either:
- Pay pre-EMI, which is only interest on the disbursed loan amount, or
- Start full EMI payments right away, even if the full loan hasn’t been disbursed yet
Pre-EMIs keep your monthly outgo low during the construction period, which is helpful if you’re paying rent too. But choosing full EMI from the start can reduce your total interest burden in the long run. It’s a trade-off — and the right choice depends on your budget and timeline.
Key documents you’ll need
To apply for a loan on an under-construction property, lenders will ask for:
- Builder’s agreement and payment schedule
- Construction approvals and sanctioned plans
- RERA registration number (mandatory for most new projects)
- Title deed and land ownership documents
- Your income proof, ID, and bank statements
Lenders like Easy Home Finance make this process smoother with a digital loan journey that reduces paperwork and speeds up approvals.
Legal checks are crucial — don’t skip them
When buying an under-construction property, make sure you or your lender verify:
- The project is approved by RERA
- Builder has clear land titles and development rights
- There are no pending litigations
- Construction permissions are in place
- Payment schedule aligns with work progress
Many loan rejections or delays happen because of incomplete builder documentation, so this step can’t be ignored.
Risks to keep in mind
Under-construction homes carry more uncertainty than ready properties. Delays in possession, regulatory changes, or builder issues can affect your financial planning.
That’s why it’s important to:
- Choose a reputed builder
- Read the buyer-builder agreement carefully
- Check the builder’s track record for timely delivery
- Understand what happens to your loan and EMIs in case of delays
Lenders often offer construction delay insurance or support options in such cases — so do ask about these.
Benefits of buying under construction (and taking a loan for it)
- Lower price than ready properties
- Option to customize layout or interiors
- More time to arrange funds as payments happen in phases
- Tax benefits on both principal and interest once EMI starts
- Value appreciation by the time of possession
Final Thoughts
Buying an under-construction home with a loan can be a smart move — if you do your homework. The flexibility of phased payments and lower entry prices are great advantages. But make sure your loan structure, builder credentials, and legal paperwork are all solid before signing anything.
With the right partner, like Easy Home Finance, you get end-to-end support — from loan eligibility checks to stage-wise disbursals — all handled digitally and transparently.
Looking for a home loan for your under-construction dream home? Let Easy Home Finance make it simple, safe, and smart.
Want to Begin?
Apply for a Home Loan with Easy Home Finance: https://easyhomefinance.in/site/apply
Check Your Eligibility Instantly: https://easyhomefinance.in/loan
Learn More About Our 100% Digital Process: https://www.easyhomefinance.in
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