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| September 17, 2021

Home Loan Disbursement Process for Under-Construction Property

Before approaching a financial institution for taking a home loan, it’s a good idea to understand how a housing loan is disbursed. Here’s a quick overview of the home loan disbursement process, including information on the three stages of loan distribution.

Types of Home Loan

The manner in which a financial institution makes the payment is largely determined by the stage of development at which the real estate property is. You may be provided a complete payout if it is a resale or a fully constructed house, but if it is half constructed, the distribution may be done in tranches.Home loans offered by banks can be used for a variety of residential properties and purposes, including: -

  • Purchase of a newly completed residence.
  • Resale
  • Land purchase for a residential plot.
  • House Construction
  • Room and area expansion/improvement at home.

Home Loan for Under Construction Properties

Home loans for under-construction properties assist you in completing your residential project without any problems or delays. You may get a home loan for your property whether it's being built independently by a contractor you’ve employed or by a reputable builder. It is generally distributed in various tranches based on the building stage. Some financial institutions only charge interest on money that has already been spent, resulting in smaller Equated Monthly Instalments (EMIs).

Putting in a loan application

Once you have chosen a lender, it is important to note that the home loan procedure – from application to disbursement – is long and involves several requirements on the side of both the lender and the applicant. According to RBI’s requirements, the following is a list of documents that you must provide for the home loan disbursement process for under construction property. Residential Proof - Attested Photocopy of any of the following:

  • Card of Rationing
  • Passport
  • Driver's License
  • Statement of Bank Account
  • ID Card for Voter

Required Documents:

  • Current Telephone / Electricity/ Gas Bill / Water Bill / or Property Tax

Identification Proof - Attested Photocopy of any of the following:

  • Aadhaar Card (UIDAI) A letter from a commercial bank confirming your identification.
  • Employee ID Card (if issued by the federal or state government).
  • Voter ID Card (if issued by the federal or state government).
  • PAN Card.

Income Documentation - Individual’s Salary

  • In the absence of a salary slip, a bank statement for the last 12 months and, if available, an ITR for the previous two years are required.

Income Documentation - Individual’s Business

  • Documents proving ownership of a business, such as a licence or a lease agreement for a shop, are examples. Purchase invoices, sales bills, and sales registers are examples of income papers. Last 12 months' bank statement If available, ITRs over the previous two years

Sanctioning the Home Loan

The second and the most crucial stage of home loan disbursement is sanction and verification, which takes place after the application has been filed to the financial institution. In addition, the loan application will be subjected to technical and property verification as well as inspections. In view of the house loan approval and disbursement procedure, the documents you submit are scrutinised, and your eligibility requirements are reviewed.

Letter of Loan Approval

After your loan application has been authorised, including the maximum loan amount you are qualified for, the interest rate you will pay, the loan tenure, and other terms and conditions. Once the loan terms are agreeable to you, you can sign the sanction letter to start the loan disbursement procedure.

Disbursement of the Home Loan

Throughout the loan application process, applicants are curious about how house loans are disbursed. The registration procedure can begin when all of the aforementioned formalities have been fulfilled. On stamp paper, the borrower must create the legal papers in the format allowed by the lender's attorneys. The lender is responsible for stamp duties, which vary depending on the state where the property is acquired. You must also provide post-dated checks for EMI payments, following which the lender will commence loan disbursement, either partially or entirely, according to the conditions of the loan agreement.

From simple eligibility criteria and application procedure to a quick home loan disbursement process for under-construction property, plots, home extensions, etc., Muthoot Homefin, a wholly owned subsidiary of Muthoot Finance, promises seamless customer experiences. With a robust marketing and branch network, Muthoot Homefin has made it easy for everyone to avail a home loan.

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