If I take up a loan for house construction, can I expect the entire loan disbursal at the start a as a lump sum amount?


#1

If I take up a loan for house construction, can I expect the entire loan disbursal at the start a as a lump sum amount?


#2

Loan disbursement in home construction loans are made in installments. Banks have their own break up of construction activity and disburse funds accordingly. For example banks may release funds towards civil work which may include foundation work to building the physical structure and not release further funds till the process is completed. Also since home construction loan disbursal is linked with construction activity, the loan disbursal would not happen if the work gets suspended or delayed.


#3

As an NRI can I opt for a home loan to buy farm land in India?


#4

Unlike resident Indians, there are some rules that you need to follow when opting for a loan as a NRI. As a non resident Indian you are not allowed to purchase any agricultural land in India. Home loans are available only for residential properties that are either under construction or ready for possession along with construction of property on a self owned plot and or any possible alterations for any existing property.


#5

Hi Aswani,

A lump sum disbursal is usually not done. The loan disbursal will be based on how the construction progresses. This will be very similar to how loans are disbursed for under-construction apartments. The loan disbursal for your construction will happen in tranches. The tranches will be specified by your bank. A certain percentage of your loan will be disbursed at every stage as the construction progresses. Please get the schedule from your bank when you avail the loan.

Cheers,
BB Expert