I avail a lone for purchase of plot. bank gave 3 year for construction of house. what if i dont construct house?


#1

i avail a lone for purchase of plot. bank dhlf gave 3 year for construction of house. what if i dont construct house?


#2

If you are unable to proceed the construction work, you will have to downsize the loan to the disbursed amount and start paying EMI. Otherwise you are keeping on paying Pre-EMI, ie, the amount you are paying back to the bank is not going towards your loan taken. It consists of interest alone, which is of no use.

So if you are unable to start construction, intimate the bank about the same and get the loan downsized. Once it is done, you can start paying EMIs. Otherwise you are loosing money


#3

Hi Binny,

Most composite loans come with certain conditions. These include a timeline for construction. Usually, banks require that you construct a home within 2-3 years of getting a composite loan. If this is not done, they start charging you an interest rate that is applicable for plot loans. You must understand that plot loan interest rates can be much higher than composite loan rates. Composite loan rates are closer to Home Loan rates.

We suggest that you check your Home Loan contract to understand the terms and conditions of the loan. If you have signed such a contract there is nothing much you can do. You can ask your bank to convert your loan into a composite loan if they are charging you at the rate of a site loan after you start constructing. You should try to figure out how that additional amount was charged before you decide to take any action. You can check the terms and conditions to see if they are any pre-closure charges for closing your loan if you don’t construct a house.

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Cheers,
BB Expert